Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — SOCIAL SECURITY

Earnings Rule

Mr. Ridsdale: asked the Minister of Social Security whether, in cases where the husband or the wife is a chronic invalid, she will disregard the earnings rule.

The Minister of Social Security (Miss Margaret Herbison): I assume that the hon. Gentleman has in mind the earnings limit for a dependency increase. This will be carefully considered in the course of our review of the National Insurance Scheme.

Mr. Ridsdale: May I ask the Minister not to reply that something has been done already under the Ministry of Social Security Act, because the £2 given is exactly the same as under National Assistance? Could something be done quickly, because the Minister is being very hard-hearted to this very small section?

Miss Herbison: At least we have given some help. This problem has existed ever since the National Insurance Scheme was introduced in 1948 and it is one among many to which we have been left to try to find a solution.

Mr. Braine: May I say from this side of the House that we are very glad that this matter has been referred to the inquiry? Would not the right hon. Lady agree that it is plain that as long as no invalid benefit is paid in cases like this suspension of the earnings rule would be a simple act of social justice?

Miss Herbison: It is because we feel that this should be examined very carefully that we have decided that it will be considered under the review.

Retirement Pension

Mr. Patrick Jenkin: asked the Minister of Social Security (1) whether she will amend the rules covering entitlement to retirement pension increments so that, where a person defers retirement beyond minimum pension age, the increment will be based on the contributions paid in the five years immediately before retirement rather than on those paid in the five years following minimum pension age;
(2) approximately how many people who have deferred retirement for more than five years beyond minimum pension age and who, though still earning, become entitled in any year to claim a retirement pension, fail to claim; what


steps are taken by her Department to draw the attention of such people to the need to claim their pensions; and by how much the National Insurance Fund benefits in each year by reason of such failure to claim benefits.

Miss Herbison: My Department identifies insured persons approaching age 70 (men) or 65 (women) who have not claimed their retirement pension and invites them to make a claim, but I regret that the information requested about the numbers who fail to claim and about savings to the National Insurance Fund is not available. I do not consider that a change on the lines suggested by the hon. Gentleman in the provisions for earning increments to pension would be justified.

Mr. Jenkin: On the last part of the right hon. Lady's Answer, may I ask whether she recognises that the problem arises where there is an increase in the rate of payment and a corresponding increase in the rate of contribution? A person who defers retirement beyond normal retiring age can therefore be paying contributions at a higher rate but become entitled to increments only at a lower rate. Does she not think that this is rather unfair?

Miss Herbison: If one were to adopt the suggestion in the hon. Member's question it would be much more unfair to the general mass of the contributors to the scheme.

Mr. Dean: Can the Minister say whether this and similar questions will be considered by the National Insurance Advisory Committee when it looks at the retirement conditions and earnings rule?

Miss Herbison: At present the National Insurance Advisory Committee is examining very carefully all aspects of the earnings rule as it applies to pensions.

Supplementary Benefits (Rents)

Mr. Higgins: asked the Minister of Social Security (1) whether tenants in furnished accommodation on National Assistance, whose rents are increased as a result of a rent tribunal decision, are normally paid an additional sum to cover the increase; and to what extent they are instructed to find other, less expensive, accommodation;
(2) whether tenants in unfurnished accommodation on National Assistance, whose rents are increased as a result of the decision of a rent officer or a rent assessment committee, are normally paid an additional sum to cover the increase; and to what extent they are instructed to find other, less expensive, accommodation.

The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Norman Pentland): A rent increase of this kind will be met in full unless it would be unreasonable to do so, for example, where the accommodation is excessive for the person's requirements or there is somebody sharing it who could reasonably be expected to make a contribution.

Mr. Higgins: Is the hon. Gentleman satisfied that people on National Assistance are not being asked to look for other accommodation which is cheaper, when this is not in fact available locally?

Mr. Pentland: The National Assistance Board has never instructed any recipient of assistance to seek alternative accommodation, as is implied in the hon. Gentleman's Question. All aspects of rent increases are taken into account by the National Assistance Board in the past, and in the future by the new Commission.

Mr. Lipton: Does my hon. Friend's Department keep statistics to show to what extent rents are being paid out of National Assistance supplementary grants? Up to now it has been quite impossible to find out exactly how much the Government are paying out in respect of increasing rents from year to year.

Mr. Pentland: At the end of 1965 only 1·1 per cent. of cases—that is, 18,000 out of 1,604,000 householders—did not have their rent met in full.

Benefits and Payments (Expenditure)

Mr. Hamling: asked the Minister of Social Security what proportion of the gross national product is devoted to social security for benefits and payments in the current financial year; and what proposals she will make for increasing this proportion.

Miss Herbison: Expenditure on social security benefits and payments represented


about 8 per cent. of the United Kingdom gross national product in 1965–66 and is expected to represent a rather similar proportion in the current financial year. The Government are pledged to ensure to those receiving social security benefits have a fair share in the country's rising living standards, and to this end we are continuing our review of the present arrangements.

Mr. Hamling: I appreciate my right hon. Friend's comment in the last part of her reply, but will she agree that in this country 8 per cent. is an inadequate amount from the gross national product to be devoted to this cause?

Miss Herbison: The percentage has risen over the years and it now stands higher than ever before. Moreover, when one is examining these matters and making comparisons with other countries, one has also to take into account the other services which are provided in this country and may not be provided elsewhere

Social Security Schemes (Review)

Mr. Hamling: asked the Minister of Social Security when the report on the review of the social security system will be received by her Department.

Miss Herbison: Measures arising from the Government's review of the social security schemes have been brought forward as they have become ready, and this will continue.

Mr. Hamling: Does my right hon. Friend recall that a major research was promised two years ago and the House is still awaiting this major report?

Miss Herbison: At no time have we said that a major report would be supplied. The review has been going on since we came into office in October, 1964, and as each part of the review was completed we have brought measures before the House so that people may benefit rather than wait until every part of the social security system has been reviewed. We intend to carry on in that way.

National Insurance Contributions Regulations, 1956

Mr. Woodnutt: asked the Minister of Social Security if she will seek to amend Regulation 4 of the National Insurance

Contributions Amendment Regulations 1956 to enable contributors to make good any deficiency in their contributions at any time, as long as they contributed for not less than 10 years.

Mr. Pentland: No, Sir. In the cases to which this Regulation applies there is already a time-limit of over six years, which should allow ample latitude in a scheme based on weekly contributions.

Mr. Woodnutt: But does not the hon. Gentleman appreciate the appalling anomaly here in that there are many people who paid for 40 years, since long before the war and who, because they have missed a year or two since the war, receive less in pension than people who have paid just for 10 years, 1948–58? I have brought to his attention the case of Mrs. Nisbet. Why cannot she have her full pension? The six-year time limit is quite arbitrary. Why cannot it be 10 years or any period, so long as people make up their contribution deficit?

Mr. Pentland: I am aware of the case to which the hon. Gentleman refers. The Minister has discretion to extend the normal time limits, including the time limit covered in my reply, in exceptional cases where she is satisfied that failure to keep within the Regulations was due to ignorance or error on the part of the contributor for which he was not at fault.

Family Circumstances (Review)

Mr. Blenkinsop: asked the Minister of Social Security when she will publish the main findings of her survey of family circumstances.

Mr. Hooley: asked the Minister of Social Security when her department's special survey of the needs of poor families will be published.

Mr. Robert Davies: asked the Minister of Social Security when she will publish the results of her study of poverty among the families of lower wage earners; and whether in the meantime she will suspend the wage-stop provisions for National Assistance over the Christmas period.

Miss Herbison: I hope to be able to publish a full report on this inquiry in the late spring of next year.
As regards the wage-stop provisions, I appreciate the motive behind my hon. Friends' suggestion, but I cannot accept it, because, while it would give a Christmas bonus to some families, it would do nothing for the much larger number who are no better off but where the father is working.

Mr. Blenkinsop: I welcome my right hon. Friend's great personal interest in this long-standing problem, but can she do nothing to speed up this report, as the inquiry was carried out in June and, with some effort, it might be possible to have at least some interim information before the date she suggests?

Miss Herbison: We already have some interim information from it. This inquiry inquired not only into the financial circumstances of these families but into many of the social matters which are of great importance. I understand that my hon. Friend wishes there to be an interim report soon so that we may come to a decision on family endowment. I assure him that the Committee which is dealing with this matter already has the interim information.

Mr. Lubbock: If as a result of this survey the right hon. Lady decides that some of the money which is at present used in granting Income Tax and Surtax concessions to families with large numbers of children should be used instead to increase family allowances, this will have to be done through the Budget. As the answer which she has given means that it cannot be done before 1968 at the earliest, could not she speed up preparation of the report?

Miss Herbison: If the hon. Gentleman had listened to the reply which I gave to my hon. Friend, he would realise that what he has said is just not the case.

Mr. Hooley: Does not my right hon. Friend agree that it is urgent to remedy the impact of the wage-stop on families living below social security levels of subsistence?

Miss Herbison: It is urgent, of course, but it is just as urgent to help the great number of families in which the father is in full-time work but earning less than the supplementary benefit scales.

Mr. Shinwell: Is my right hon. Friend aware that, in spite of all that has been done over the years by way of pensions, National Assistance and the like, there is in this country a vast amount of poverty and, indeed, there seems to be a greater disparity between rich and poor now than we have had for many years? Will she seek to expedite this inquiry, as this Government are pledged to remove poverty?

Miss Herbison: I agree very much with what my right hon. Friend has said, and I have time and again let hon. Members know how deeply concerned I am, particularly for the children who are deprived. I assure him that we are pushing on as quickly as possible in trying to find a solution to this problem.

Pneumoconiosis

Mr. Woof: asked the Minister of Social Security in how many cases in the last 10 years, when the death certificate has certified that death is partly attributable to pneumoconiosis, no industrial diseases benefit has been paid to the widow.

The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Harold Davies): I regret that this information is not available.

Mr. Woof: Will not my hon. Friend agree that there is need for a further investigation in the light of rejection of death claims when assessments have been granted during life, and will he agree also to have an investigation to find out the reasons for rejecting pneumoconiosis as a contributory cause when the patient has died of emphysema, heart disease or broncho-pneumonia?

Mr. Davies: I agree in the main with the first part of my hon. Friend's supplementary question, but I must point out that any collection of statistics about those who have been turned down would be meaningless because we do not keep account of those who may have had slight pneumoconiosis but in respect of whom no claim is made for dependants or widows.

Mr. Dean: Will the hon. Gentleman realise that, as his hon. Friend has pointed out, it is exceedingly difficult to diagnose this disease and the borderline


between it and emphysema or bronchitis is very narrow? We feel, as the hon. Gentleman feels, that there are many cases where people are not getting a fair deal. Will the hon. Gentleman look into it the position again?

Mr. Davies: Certainly, and I am grateful to the hon. Gentleman for putting that point of view. My Answer to the next Question may help a little to make clear that we are doing our utmost in this direction.

Mr. Woof: asked the Minister of Social Security what medical research is now going on in her Department to arrive at a more accurate diagnosis in the case of pneumoconiosis.

Mr. Harold Davies: Accurate diagnosis of pneumoconiosis depends on a combination of skill, knowledge and experience in the interpretation of X-rays and their correlation with clinical findings and industrial history. We encourage continuous research by members of pneumoconiosis medical panels, who have the closest contact with the pneumoconiosis research unit. universities and overseas bodies concerned with authoritative research into this disease.

Mr. Woof: I thank my hon. Friend for that reply, but will he agree that variations in the past suggest that standards of diagnosis have fluctuated and give rise to the suspicion that the fall in the number of cases is not a true reflection of the incidence of this terrible disease?

Mr. Davies: Special inquiries have been made into the correlation of the findings of the pneumoconiosis medical panels in life and in death, and these findings show that the diagnoses of pneumoconiosis by the panels in life agree with post-mortem findings in 95 per cent. of cases. This is higher than the general rule. Nevertheless, research by our medical officers is continuously carried on, and only last September one of our principal medical officers visited the Vienna Industrial Medicine Conference to look into these problems. As the House knows, we are at this moment continuing research with the pneumoconiosis unit at the Glamorgan hospital and with universities. We are aware of this problem and of its importance to industry.

Mr. Dean: Does the hon. Gentleman realise that there is still a strong feeling that where there is a doubt, in too many cases it tends to be decided against the person concerned rather than in his favour?

Mr. Davies: I should not like to give a categorical answer to that question. We are aware of the feelings in industry about these findings, and we are doing out utmost to find an answer to this very difficult problem. The hon. Gentleman earlier today admitted that it was a difficult problem.

Offices, Bristol

Mr. Ellis: asked the Minister of Social Security (1) what long-term plans she has for dealing with the overcrowding of her Jamaica Street offices, Bristol;
(2) what immediate action she proposes to take to deal with the overcrowding at her Jamaica Street offices, Bristol.

Mr. Pentland: My right hon. Friend is aware that conditions at this office are unsatisfactory and it is hoped that premises will before long be made available for setting up an additional office in that locality. Meanwhile as a temporary relief I hope that overflow accommodation in another building will be ready for receiving callers by the end of the year.

Mr. Ellis: While thanking my hon. Friend for that reply, may I ask him to continue to keep this situation under review, as very serious overcrowding is taking place, and to provide such assistance as may become necessary?

Mr. Pentland: Yes, Sir. As I have said, we are aware that the premises are highly unsatisfactory and we are doing what we can about it.

Mr. Dobson: May I have an assurance from my hon. Friend that the other premises which are to be used are not one of the other offices in Bristol—the Woodborough Street office, which is operating at the moment under the same sort of conditions as those at the Jamaica Street office?

Mr. Pentland: No, I cannot give my hon. Friend that assurance. But I can assure him that it is hoped that suitable


premises will be found soon and that the necessary internal structural work and the provision of the new equipment and so on will be completed in time for the office to be set up within five or six months.

National Insurance Benefit (Moslems)

Mr. Iremonger: asked the Minister of Social Security how many insured persons are of the Moslem faith and have more than one wife; and what plans she has for legislation to regulate the provision of National Insurance benefits for the dependants of insured persons who embrace the Moslem faith and take wives additional to the one already covered by the insured person's National Insurance contributions.

Miss Herbison: The information requested by the hon. Member is not available. As to the second part of the Question, the National Insurance Scheme provides increases of benefit only for wives of monogamous marriages and I have no plans for change.

Mr. Iremonger: Does this mean that a Moslem with more than one wife does not have benefits for his second wife? Is that why the information is not available—or is it that a Moslem does have benefits for both wives and we do not know how many?

Miss Herbison: A Moslem has benefits for only one wife, as is the case with anyone else in this country.

Pensions and Benefits

Mr. Heffer: asked the Minister of Social Security (1) whether she will increase retirement pensions and National Assistance rates, as soon as the period of the income standstill has terminated; and if she will make a statement;
(2) what steps she is taking to restore the retirement pension to the level in real terms it was when introduced in 1965; and if she will make a statement.

Miss Margaret Herbison: I would remind my hon. Friend that the increase in pensions in March 1965 was one of about 18 per cent. against an increase in the Retail Prices Index since then of 6·8 per cent.

Mr. Heffer: While appreciating the Answer and recognising the great work

done by my right hon. Friend, may I ask her nevertheless to give an assurance that at intervals the retirement pensions will be carefully looked at with a view to increasing them at intervals?

Miss Herbison: I can assure my hon. Friend that each month I look at the movement of the Retail Prices Index because I am concerned that our old people should not suffer. It is because of this that I was able to give the figures which I have given today.

Mr. Winnick: While recognising the large increase which took place in retirement pensions in March, 1965, may I ask my right hon. Friend whether she does not agree that there is still a very strong case indeed for a further substantial increase as soon as possible? Secondly, now that social secrurity minima have been established for elderly people, does she hope that within six months these minima will be reviewed in order that they may be increased?

Miss Herbison: I am afraid at this stage I cannot add anything to the answers which I have given to my hon. Friends.

Widows' Pension (Payment)

Mr. Worsley: asked the Minister of Social Security whether she will introduce legislation to enable widows' pension to be paid in arrears to widows, who having lived apart from their hubsands were not aware of the fact of their husband's death, whatever the period which may have elapsed since that date.

Miss Herbison: I am aware of the effect of the time limits on claims to benefits. They apply to all benefits, however, and it is not possible to consider any particular aspect in isolation.

Mr. Worsley: Would the right hon. Lady agree to look at all these aspects in her review? Is she aware that it is very harsh on a woman who may be living apart from her husband, and who has no reason to know of his death, to find subsequently that she is not able to draw money to which she was entitled?

Miss Herbison: Help is given to such women. It may be difficult for them to go to the local offices from time to time to see whether anything has happened, but if they do—and some women do—then they get the information and are


able to make application for their pensions when the time arrives. But I agree with the hon. Member that this question of time limit—not just in this case but applying to all benefits—is one which we hope to have looked at.

European Economic Community (Pensions and Food Prices)

Mr. Ridsdale: asked the Minister of Social Security whether she will make a statement on the effect of the entry into the European Economic Community on pensioners; and what action the Government propose to take in view of the estimated rise in the price of food which will result from entry.

Miss Herbison: Entry into the European Economic Community would not affect pension rights. The Government keep a continuous watch on the level of pensions in relation to all relevant factors, of which food prices is only one.

Mr. Ridsdale: As pensioners' living standards are falling very considerably, besides those of the rest of industry, will the Minister assure the House that pensioners will not suffer because of the 14 per cent. rise in the cost of food due to entry into the Common Market?

Miss Herbison: The first part of the hon. Member's supplementary question is quite wrong. In real terms the pensioners today still have more money than they had in 1964 or have had at any earlier time. As for the other matters, of course we keep under review the whole time anything which will affect the standard of living of the pensioner.

Mr. Freeson: Will my right hon. Friend bear in mind that we cannot go on for ever appreciating the increase in benefits introduced in March, 1965, and that something should be done to make sure that the pension retains its value for the people for whom we introduced that benefit in the spring of last year?

Miss Herbison: I could understand my hon. Friend's supplementary question if the pension rate today were less in real terms than just before it was raised in March of last year, but that just is not the case. [HON. MEMBERS: "That was a Tory standard."] It is not a Tory standard. We gave an increase last March which was very much higher than was needed in proportion to the increase in

the Retail Prices Index and, moreover, higher than was needed in proportion to the increase in earnings.

Mr. Dean: Does not the right hon. Lady appreciate that her hon. Friend the Member for Willesden, East (Mr. Freeson) is really asking her to fulfil her election pledges made at the last election?

Miss Herbison: There need be no fear about that. The very first thing that the Government did was to give to the old people the biggest increase ever given in real terms. This very day those who are betting supplementary benefits, the old people, will receive payments 27 per cent. higher than when we came to power.

Selective Employment Tax

Mr. Braine: asked the Minister of Social Security whether she will carry out a survey to discover the number of employed persons, whether part time or full time, aged 65 years or over in the case of men and 60 years and over in the case of women, in respect of whom the Selective Employment Tax is payable.

Mr. Gower: asked the Minister of Social Security whether she will carry out a survey to discover the number of employed persons, whether part time or full time, aged 65 years or over in the case of men and 60 years and over in the case of women, in respect of whom the Selective Employment Tax is payable.

Mr. Pentland: My right hon. Friend has no special survey of this sort in mind at present.

Mr. Braine: Would the Parliamentary Secretary reconsider this question since one reason for setting up the new Ministry was to ensure better information about elderly people for whom the social security benefits are paid? Surely it should be a matter of concern to his Department that a good many of the elderly people then in work have since lost their jobs as a result of the application of the pernicious Selective Employment Tax? Surely this information should be obtained?

Mr. Pentland: I do not appreciate the hon. Member's supplementary question. We just do not know that yet, and the facts will not become apparent for a long time to come.

Mr. Frederic Harris: Does the Minister seriously tell the House that he does not believe that the effect of Selective Employment Tax is to keep elderly people out of employment? This is a fact, and it is happenng all over the country.

Mr. Pentland: I am here to apply my mind to the facts as they are before me, otherwise the House would call me back to the Question.

Mr. Holland: asked the Minister of Social Security how many people have applied for the monthly instead of three-monthly repayment of Selective Employment Tax paid in respect of nursing or domestic assistance in the home for an elderly or disabled person.

Mr. Dean: asked the Minister of Social Security how many people have applied for the monthly instead of three-monthly repayment of Selective Employment Tax paid in respect of nursing or domestic assistance in the home for an elderly or disabled person.

Miss Pike: asked the Minister of Social Security (1) on what grounds those applying for the monthly instead of three-monthly repayments of Selective Employment Tax paid in respect of nursing or domestic assistance in the home for an elderly or disabled person are being subjected to a means test;
(2) what will be the administrative cost of the means test which applicants have to undergo in order to obtain monthly instead of three-monthly repayment of Selective Employment Tax paid in respect of nursing or domestic assistance in the home for an elderly or disabled person.

Mr. Scott: asked the Minister of Social Security what will be the administrative cost of the means test which applicants have to undergo in order to obtain monthly instead of three-monthly repayment of Selective Employment Tax paid in respect of nursing or domestic assistance in the home for an elderly or disabled person.

Mr. Pentland: At 22nd November, 40 such applications had been received. Monthly repayments are intended for persons for whom the longer waiting period would cause hardship. The claimant is asked for brief details of his

income and expenses on which the question of hardship is decided. The procedure for considering a claim for monthly repayments is simple and if applications continue to be received at the present rate, the administrative costs are not likely to exceed £100 a year. If the standard period of repayment were monthly instead of quarterly, substantial additional administrative costs would, however, be incurred.

Mr. Holland: Does not the hon. Gentleman think it just a little iniquitous that these people, many of them elderly and infirm, should be subjected to a means test in order to qualify not for a grant but for repayment of their own money in a shorter length of time than other people?

Mr. Pentland: No, Sir. This is necessary in order that we can apply this Selective Employment Tax as it was intended to be applied. Up to 22nd November, the total number of claims for repayment received was 8,882, of which 6,768 have so far been allowed.

Mr. Dean: Until this unjust impost on the old and disabled is removed, will the hon. Gentleman at least look at the possibility of paying back this money at monthly intervals to all those in the special household category?

Mr. Pentland: I cannot forecast what the future may hold, but if monthly repayments were the general rule, claims would have to be examined and payments made to employers 12 times a year instead of four times a year under the present arrangement for refunds at three-monthly intervals. This could give rise, according to the Department's information, to a threefold increase in administrative costs.

Mr. Scott: Do not the hon. Gentleman's replies bear out our view that the tax should never have been imposed on these households? Does not the need for this particularly miserable application of the means test bear out our whole attitude when the Selective Employment Payments Act was going through the House?

Mr. Pentland: We are concerned only with the collection of the tax. The hon. Gentleman's supplementary question should be put to the Treasury.

Mr. Braine: Is it not clear from the hon. Gentleman's replies that, first, his


Department is not aware of the full impact of the tax upon various categories of people? The hon. Gentleman says that he is only concerned with the facts. Secondly, is not what guides him in this, apparently, the administrative convenience of the Department?

Mr. Pentland: Not at all. We are aware of the facts. For the hon. Gentleman's information, I will tell him that monthly repayment is made where the gross weekly income of the claimant after paying for the National Insurance stamp and the wages of the employed person, and allowing 30s. for each dependent child, is less than £10 if the claimant is married or £8 if single. These income limits closely follow those prescribed for a full rates rebate under the Rating Act. 1966.

Unemployment Benefit (Trade Disputes)

Mr. Dance: asked the Minister of Social Security whether she will introduce legislation to amend Section 22(1) of the National Insurance Act, 1965, to ensure that people who have received redundancy notices prior to the start of a trade dispute shall be entitled to un-employment benefit.

Miss Herbison: All aspects of the trade dispute disqualification for unemployment benefit are at present being examined by the Royal Commission on Trade Unions and Employers' Associations and I propose to await its recommendations on this very complicated subject before deciding whether any changes should be made in the present provisions.

Mr. Dance: We all appreciate that the right hon. Lady is very sympathetic to cases of hardship. Is she aware that in my constituency many car transporter employees were given redundancy notices on one weekend, that a strike started during the following week and that, since then some of these notices have expired and the employment terminated? This is causing hardship and, although we are grateful for having heard her views now, cannot she go further?

Miss Herbison: I am sorry, but under the present legislation there is nothing that can be done. This position has obtained since 1927. I am hoping that the

Royal Commission will be able to put forward proposals that will ease the hardship—or perhaps I should say injustice— as our people see it at the present time.

Mr. Archer: asked the Minister of Social Security how many potential recipients of unemployment benefit in the latest period for which figures are available have been refused benefit under Section 13(1) of the National Insurance Act 1946, although not themselves participating in a trade dispute.

Miss Herbison: I regret that this information is not available.

Mr. Archer: Would not my right hon. Friend agree that the effect of the Section at the moment is that if there is one member in a workshop in a different union from the others it may deprive all of the employees of any benefit? In addition to the injustice of this, does it not provide a real incentive for a closed shop?

Miss Herbison: It is because of the difficulties involved in trade disputes and how unemployment benefit is affected by them that I felt it was important for the Royal Commission on Trade Unions and Employers' Associations to examine the whole of this matter.

Low Wage Earners

Mr. Maurice Macmillan: asked the Minister of Social Security what methods she intends to use, and what definition of need she has in mind, in her plans to help low wage earners with large families; and how she proposes to ensure that payments to relieve such need are confined to those included in her definition.

Mr. Christopher Price: asked the Minister of Social Security if, in the light of the reference to the priority for lowest-paid workers in the White Paper on Prices and Incomes Standstill (Period of Severe Restraint), she will seek power to make an early substantial increase in family allowances.

Miss Herbison: I would refer the hon. Gentlemen to my replies on this subject on 21st November.—[Vol. 736, c. 929–31.]

Mr. Macmillan: I thank the right hon. Lady but will she give us an assurance that, whatever administrative method she


may choose—and she has given an interview on this subject to the Financial Times—she will make sure that the payment is as rapid as possible in time and is not held up in order to make the administrative survey more complete?

Miss Herbison: In answer to an earlier Question, I said that the Committee dealing with this matter had already got interim information as a result of the survey and I give an assurance, as I have given it before, that we are pressing on as speedily as possible with this matter.

Mr. Price: Now that we have had the White Paper on the prices and incomes standstill, with specific priority given in it to lower-paid workers, and since these workers are not likely to get a general increase because they are usually in a package deal with higher-paid workers, would not my right hon. Friend agree that a very special responsibility rests on her Department to get something for the large families during the period of severe restraint from January to July?

Miss Herbison: Without even mentioning the White Paper, I believe strongly that a very special responsibility lies with the Government to ensure as quickly as possible an end to the deprivation from which so many children—half a million it is reckoned—are suffering at the present time.

Family Allowances

Mr. Pardoe: asked the Minister of Social Security what increases in family allowances would be necessary to restore them to the same real value as when they were first introduced.

Mr. Pentland: Approximately 2s. 6d. on the allowance for the second child and 6d. on the allowances for subsequent children.

Mr. Pardoe: Does not the hon. Gentleman agree that, even if these increases were made, it would not be enough to eradicate poverty which exists, particularly among large families?

Mr. Pentland: Yes, I would agree. As we have said many times, the Government have the whole system of family allowances under consideration.

Mr. Pardoe: asked the Minister of Social Security what increases in family

allowances would be necessary to restore them to the same proportion of average earnings as when they were first introduced.

Mr. Pentland: Approximately 8s 9d. on the allowance for the second child and 6s. 9d. on the allowances for subsequent children.

Mr. Pardoe: Has the hon. Gentleman seen the radical proposals put forward at the Liberal Party conference this year for reforming the family provisions? A copy was sent to him. When can we expect these proposals to be implemented now that they have so much support on the benches behind him?

Mr. Pentland: I assure the hon. Gentleman that anything the Liberal Party can do we can do better.

Benefits (Cost-of-Living Charges)

Mr. Gwilym Roberts: asked the Minister of Social Security if she will seek power to introduce National Insurance benefits and supplementary benefits adjusted to cost-of-living changes at regular intervals.

Miss Herbison: These matters naturally fall to be considered as part of our review of social security, but I would remind my hon. Friend that National Insurance and supplementary benefits are substantially higher at the present time than they would have been if they had been tied to the cost of living in the past.

Mr. Roberts: I thank my right hon. Friend for the latter part of that reply, but does she agree that, in the coming economic expansion, if there is any increase in the cost of living, there is danger that the pensioners may be left behind again? Will she assure us that, at the end of the present freeze, people on pensions and benefits of all types will be given No. 1 priority?

Miss Herbison: It is difficult to say what will be given No. 1 priority, particularly when one listens to all the pressures being exercised, quite rightly, from this side of the House. All I can say is that this is a matter which the Government keep under review continually and that we are determined to safeguard the position and the standard of living of our old people.

Mr. Dean: May I press the right hon. Lady again on this? Does not she agree that she is pledged, by the Labour Party's last election manifesto, to tie pensions and other benefits to the cost of living?

Miss Herbison: The hon. Gentleman is wrong again. We pledged far more than that. We said in 1964 that they would be tied to rises in earnings.

Supplementary Benefits

Mr. Gwilym Roberts: asked the Minister of Social Security how many people qualifying for supplementary benefits are not drawing them; and what steps she is taking to see that these people are catered for.

Miss Herbison: As regards the first part of the Question, it is not possible to say how many people will qualify for supplementary benefits when these become payable on 28th November, that is, today. Since 3rd October, when claims were invited from people over pension age, about half a million new claims for supplementary pension have been received. This indicates that the initial publicity for the scheme has been effective; measures to encourage people to claim will of course continue.

Mr. Roberts: I am sure that we are all equally glad that we are moving away from the position of the Tory Party when——

Mr. Speaker: Order. Question.

Mr. Roberts: Would not my right hon. Friend agree that finding these people must be the spearhead of our drive against poverty? Will she undertake to organise a house-to-house anti-poverty campaign, using all the facilities of her Ministry and local authorities, so that we can find in their own homes these needy people who are incapable of applying for help?

Miss Herbison: I am delighted that 500,000 people have applied and it seems so far that about two-thirds will be getting supplementary pensions. We have made great publicity efforts, and I think that this is the result. As part of our continuing effort to encourage people to make a claim, a special leaflet has been prepared for members of statutory and

voluntary organisations, social workers and churches, all of whom can help greatly.

Mr. Frank Allaun: But is it not a fact that, far from everyone having become greedy and grasping, there are very many poor people who are not claiming what they are entitled to? Will my right hon. Friend therefore heed my hon. Friend's plea to see that there is a visit to the home of every person who might be entitled to such supplement?

Miss Herbison: There were more than 700,000 people who should have had a payment but who had not applied, and about one-quarter of these people were below the National Assistance level. Some were not suffering. About 500,000 have now applied, and we will continue our efforts until we have claims from all of them.

Allowances (Wage-Stop)

Mr. Eadie: asked the Minister of Social Security how many persons receiving reduced National Assistance allowances because of the wage-stop at the end of 1965 were classified as general labourers and light labourers, respectively; and how many were disabled.

Mr. Pentland: Of the 14,839 unemployed persons receiving reduced assistance allowances because of wage-stop on 28th September, 1965, 6,200 were classified as general labourers and 4,800 as light labourers. It is not known how many were disabled.

Supplementary Allowance

Mr. Eadie: asked the Minister of Social Security whether she will take steps to ensure that the Supplementary Benefits Commission do not make the right to a supplementary allowance conditional on registration for employment in the case of persons who are unlikely to obtain full-time employment.

Mr. Pentland: Registration is required when a person claiming a supplementary allowance is capable of full or part-time employment and without domestic ties. I do not think it would be in the interests of the community or the individual concerned to waive this requirement solely because of difficulty in finding work.

Mr. Eadie: Is my hon. Friend aware that in the past sticking to hard-and-fast


rules has caused some hardship and injustice? In the light of that, will he consider whether this matter does not require to be weighed very carefully indeed?

Mr. Pentland: We should be quite prepared to accept any evidence coming from any of my hon. Friends about the imposition of hardship, but the waiving of any requirement to register in the case of a man fit for work could have exceedingly bad effects psychologically. We also have to accept that a disabled man particularly might think that he had been more or less thrown on the scrap heap. We have to watch that very carefully.

Sickness Benefit (Wage-Stop)

Mr. Adam Hunter: asked the Minister of Social Security whether she is satisfied that under her regulations the Supplementary Benefits Commission will not apply the wage-stop to people who are drawing sickness benefit; and if she will make a statement.

Mr. Pentland: As my right hon. Friend explained to the House during the debate on the Ministry of Social Security Bill, the wage-stop cannot be applied to the long-term or the chronic sick, but only to the unemployed and to people who are temporarily not available for work because of sickness.

Mr. Hunter: Is my hon. Friend aware that more and more people are expressing concern about the effects of the wage-stop, particularly on the man with a young and large family? Should not cognisance be taken of that growing concern?

Mr. Pentland: Yes, Sir. I cannot improve on what my right hon. Friend has already said about the wage-stop. However, if it is clear at the time of the claim for benefit that the sickness is not temporary, the wage-stop will not be applied. If the wage-stop is applied in a case of sickness benefit, it will be reviewed after the claimant has been sick for six months.

Retirement Pension and Average Earnings

Mrs Knight: asked the Minister of Social Security what would be the weekly rates of the National Insurance retirement pension if those rates had kept pace

with the increase in average male industrial earnings since March, 1965, when pension rates were last increased.

Mr. Pentland: On the basis of the Ministry of Labour's inquiries into average earnings in April, 1965, and April, 1966, the latest date for which a figure is available, 85s. 8d. for a single person and 139s. 3d. for a couple.

Mrs. Knight: Is not the hon. Gentleman aware that that is 5s. 8d. short of what it would have been if the Labour election pledge had been carried out, because the pledge clearly was that after the increase had been made, the pension would be linked to earnings?

Mr. Pentland: All the pledges will be carried out.

Mrs. Knight: When?

Mr. Pentland: The hon. Lady may be interested to know that if in March, 1965, the pension had been put up only in line with the rise in average earnings between April, 1963, and October, 1964, the rates would have been 75s. 8d. for a single person and 122s. 2d. for a married couple, whereas in fact they become 80s. and 130s.

Mr. Leadbitter: Is my hon. Friend aware that, while the interest of hon. Members opposite in this subject this afternoon will be noted outside the House, although they did not vote against the pension increases in March, 1965, they voted against the Finance Act provisions to implement them?

Mr. Pentland: Yes, Sir.

Mr. Braine: Is not the point which the Parliamentary Secretary is seeking to evade and which has been raised on both sides of the House the fact not that the pension was increased substantially, as it was, but that the increase has since lost a great deal of its value through inflation?

Mr. Pentland: No, Sir. What I was trying to impress on the House was that Labour will fulfil its pledges.—[HON. MEMBERS: "When?"]—If we were to make a comparison between the increase in March, 1965, and the average increase over the 13 years when the Tory Party was in power, it would be seen that our increase stood way above anything the Tory Party ever did.

Retirement Pensioners (Earnings Rule)

Mr. Gower: asked the Minister of Social Security what decision she has now reached on raising the earnings limit for National Insurance retirement pensioners.

Miss Herbison: I would refer the hon. Member to the reply I gave my hon. Friend, the Member for Blaydon (Mr. Woof) on 14th November.—[Vol. 736, c. 5.]

Mr. Gower: Does not the Minister recognise that successive Labour Budgets have reduced the financial ability of many companies to provide this employment while S.E.T. imposes a penalty upon companies which do? Since it may be difficult for elderly persons to find this employment, will she not give them a reward for their assiduity?

Miss Herbison: The supplementary question that has been put has nothing whatever to do with the earnings rule. The rule and all its implications are being examined. We hope to have a report before very long and the Government will decide what action to take upon it.

Disabled People

Mr. Archer: asked the Minister of Social Security whether she will undertake a specific inquiry into the incidence of financial hardship among various categories of disabled people.

Miss Herbison: I would remind my hon. Friend that the new supplementary benefits scheme which came into operation today makes improved provision for disabled people, among others, who are suffering financial hardship.

Mr. Archer: While recognising the point made by my right hon. Friend, may I ask whether she would accept that there is a very real problem here, namely, the fact that benefits depend not upon need or the nature of the disability but upon the historical accident of how it arose?

Miss Herbison: There is a benefit for war disablement, or industrial disablement; and then there is the ordinary National Insurance sickness benefit, but even this does not apply to the wife who has had no contributions. We are well aware of the whole position.

Mr. Braine: Is the right hon. Lady aware that there is a growing volume of evidence to show that very real hardship is being caused in families where the wife is totally incapacitated and there is no constant attendance allowance, or where she has to go out to work and the earnings rule is applied and she has a totally incapacitated husband? Is there not a case for examining this in the review which is now under way?

Miss Herbison: All of this is being looked at in the review. There are many, many things which have to be looked at, not because the problems arose after October, 1964, but because they were never thoroughly examined by previous Governments. In one breath the Opposition Front Bench is saying that we ought to cut down taxes and yet if I were to do everything asked of me by hon. Members opposite it would mean a very great increase in taxation.

Redundant Workers (Retirement Pension)

Mr. John Hynd: asked the Minister of Social Security whether Her Majesty's Government will introduce early legislation to provide for advancement of retirement pensions to workers over 50 years of age, now rendered redundant and unable to find suitable alternative employment on account of their age as a result of the Government's re-deployment policy.

Miss Herbison: I do not think that it would be right to introduce an earlier pension age in the circumstances which my hon. Friend has in mind.

Mr. Hynd: While recognising what has already been done for redundant workers through redundancy payments, redeployment and training schemes, may I ask whether my right hon. Friend is aware that many of these men are not susceptible to training for other jobs? Does the Minister appreciate that many are semi-casual workers not benefiting from the redundancy payments, and will she have another look at this to see that those suffering from the Government's policies have compensation, as do other workers?

Miss Herbison: I realise the difficulties, but I still think that it would be very wrong to say that any worker ought


to have a pension at 50, because it would mean that one was throwing him on the scrapheap and saying that the country had no further need of him. I would be completely opposed to that. On the other hand, I should like to see more training facilities, and employers being urged to give the opportunities of work to these men.

Sir C. Osborne: While expressing every sympathy for workers over 50 who find it difficult to get other jobs, may I ask the Minister to make it clear to both sides of the House that greater pensions cannot be paid unless industrial productivity increases and real national income increases?

Miss Herbison: There are two matters to be taken into account when thinking of increases in social benefits. One is what one will be able to do from greater productivity and the other is what one can do from redistribution of income. Both of these matters are being taken into account by the Government.

Oral Answers to Questions — CHURCH COMMISSIONERS

International Language Club, Croydon

Mr. Winnick: asked the hon. and learned Member for Brigg, as Second Church Estates Commissioner, what were the results of the talks held recently between the representatives of the Church Commission and the International Language Club, Croydon.

Mr. E. L. Mallalieu: No talks have taken place recently between representatives of the Church Commissioners and the International Language Club.

Mr. Winnick: Have not talks taken place between solicitors acting for the Church Commissioners and the International Language Club? Would not my hon. and learned Friend agree that if the International Language Club, Croydon, is closed down, a tremendous amount of hardship will be caused to individual students? May I appeal to him to use his good offices as Second Church Estates Commissioner to try to make sure that talks take place directly between the Church Commissioners and the manager of the International Language Club and out of 21,500,000—

Mr. Speaker: Long enough.

Mr. Mallalieu: No, it is not a fact that solicitors representing the Church Commissioners are talking to the International Language Club. I agree that it would be undesirable for the Club to close down, but that, unfortunately, is not the responsibility of the Church Commissioners.

Oral Answers to Questions — MINISTRY OF HEALTH

Old People (Hypothermia)

Mr. Winnick: asked the Minister of Health what action is being taken to deal with the special problem of hypothermia during the winter for very elderly pensioners; and whether he will introduce legislation to provide all-night storage heaters to those in need.

The Parliamentary Secretary to the Ministry of Health (Mr. Charles Loughlin): My right hon. Friend proposes shortly to remind health and welfare authorities of this danger, to which their attention was drawn two years ago. He does not think that legislation is necessary to enable local authorities to take the appropriate action where required.

Mr. Winnick: Does the Minister not consider this to be a very urgent problem indeed? Have not a very large number of very elderly people died during the winter months because of the intense cold? If a circular is to be sent to local authorities can it be done as soon as possible?

Mr. Loughlin: I assure my hon. Friend that the circular will be reissued as soon as possible and that we are concerned about the possibility of deaths among old people as a result of hypothermia. We will get the circular off as quickly as possible.

Doctors (Hull)

Mr. McNamara: asked the Minister of Health what is the ratio of patients to doctors in the Hull Executive Council area; and how this ratio compares with the ratio of patients to doctors for the United Kingdom as a whole.

Mr. Loughlin: The average list at 1st October, 1965, was 2,703 for unrestricted principals working mainly in Hull, and 2,356 for the United Kingdom as a whole.

Mr. McNamara: Would my hon. Friend agree that these figures show quite a serious situation? Would he tell the House what steps he is taking to keep this situation under control?

Mr. Loughlin: It is a serious situation and we appreciate that Hull is under-doctored. The whole of Hull has now been designated as an under-doctored area, although, with the exception of the east part of Hull, it has not been so designated for three years. This is the only thing that we can do. There is no restriction on any doctor setting up practice in Hull.

Oral Answers to Questions — HOSPITALS

Nurses (Pay and Conditions)

Mr. Molloy: asked the Minister of Health what plans are envisaged for a comprehensive review of pay and conditions for nurses; and if he will make a statement.

The Minister of Health (Mr. Kenneth Robinson): The pay and conditions of service of nursing staff in the National Health Service are matters in the first instance for the Nurses and Midwives Whitley Council. The pay agreement made by the Council in 1965 provided that it would run for two years from 1st July, 1965 and that during this time no major issue should be raised except with the consent of both sides.

Mr. Molloy: Would not my right hon Friend agree that since that meeting of the Whitley Council there is now an urgent need for a special examination of the problem affecting nurses? Would he also comment on the fact that private agencies have sprung up recruiting nurses, which are not in any way connected with the Ministry or local authority organisations?

Mr. Robinson: Nursing agencies are no new thing. If my hon. Friend wants to ask me a question about the relationship to the National Health Service perhaps he would put it on the Order Paper. I can assure him that there are claims for a reduction in working hours and also for overtime pay, but so far there is no claim for a general review of pay before the Whitley Council.

Mr. William Hamilton: Can my right hon. Friend say whether, within the context of the prices and incomes policy, the wages and conditions of nurses come within the category of lower-paid workers, because if they do not they jolly well should?

Mr. Robinson: This is not an interpretation which I ought to give off the cuff at Question Time.

Mr. Dean: Does the right hon. Gentleman realise that there is a good deal of confusion among nurses and other staff about how they will be affected during the period of severe restraint? Can the right hon. Gentleman clear this up as soon as possible?

Mr. Robinson: The consideration of nurses' remuneration will not come within the period of severe restraint because the two years to which I have referred do not expire until 1st July.

In-patients (Acute General Beds)

Dr. Dunwoody: asked the Minister of Health what is the average length of time spent in hospital by in-patients occupying acute general beds at the last convenient date; and how this compares with the situation 10 years ago.

Mr. K. Robinson: The average length of stay in acute general beds has fallen from 18·2 days in 1955 to 12·7 days in 1965.

Dr. Dunwoody: Would not my right hon. Friend agree that this is a quite outstanding example of increased productivity that gives the answer to the many people who inaccurately suggest that over the years the standards of treatment in the National Health Service have deteriorated?

Mr. Robinson: I agree that this is a remarkable statistic, and I feel that it fully bears out the interpretation put on it by my hon. Friend.

Mr. Patrick Jenkin: Would not the right hon. Gentleman also agree that this is a remarkable tribute to the researchers and others in the drug industry to whom a great deal of the credit needs to be given?

Mr. Robinson: I agree that advances in medical techniques, including chemotherapeutic techniques, have contributed


to this, but that is only one of a number of factors.

Mr. Braine: Would the Minister agree that this is remarkable and beneficial to the patients as a whole only if it has been paralleled by a development of local authority services? Is he satisfied that the local authority services in the area in question can cope with the people discharged early from hospital?

Mr. Robinson: This is a general question; there is no "area in question". I am satisfied that community services have expanded considerably and, in general, are quite capable of handling the additional work which arises from the earlier discharge of patients.

RHODESIA

The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement.
As the House will know, my right hon. Friend the Commonwealth Secretary returned this morning from his visit to Salisbury, where he had extensive talks with the Governor and also saw Mr. Smith.
The Government will, of course, be considering most carefully his report on his discussions and, at the earliest possible moment, a fuller statement will be made.

Mr. Heath: I thank the Prime Minister for what he has said. Of course, we understand the reason why it is an interim statement. I am sure that the whole House welcomes the fact that the efforts to reach a negotiated settlement are continuing.

MEMBERS' SPEECHES (LENGTH)

Mr. Kenneth Lewis: On a point of order. On Friday, Mr. Speaker, we had a Private Members' Day and you specially requested that short speeches should be made. I and, no doubt, other hon. Members were not able to speak in that debate in view of the fact that there was a speech by the Government Front Bench spokesman of 35 minutes. I ask you, Mr. Speaker, to protect back-bench Members so that private Members' time is not usurped by the Government.

Mr. Speaker: I am afraid that that is not a point of order for the Chair. The Chair does its best to protect backbench Members, and indeed Front Bench Members, from long speeches by hon. and right hon. Members which prevent other Members from speaking in the debate, but it can do so only by exhortation and prayer.

COMMITTEE OF PUBLIC ACCOUNTS (REPORTS)

3.32 p.m.

Mr. John Boyd-Carpenter: I beg to move,
That this House takes note of the First and Second Reports of the Committee of Public Accounts and of the Treasury Minute on those Reports (Command No. 3137).
I hope that the point of order of my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) is not thought to have any special relevance either to the fact that I was about to speak or to the characer of the debate. In my experience, this is not a debate in which there is very much difficulty about hon. Members getting in to speak, nor is it a debate which, if it arouses controversy, is apt to arouse it on party lines.
The Motion which I have the honour to move asks the House to take note of the two Reports of the Public Accounts Committee. The first Report deals exclusively with the grim and somewhat archaic technicalities of the law of virement, and I do not propose to inflict on the House any comments on that interesting but somewhat recondite subject.
I propose to direct such observations which it falls to me to make to the Second Report, which embodies the main effort of the Committee in dealing with the accounts laid before it with the Comptroller and Auditor General's Report for the year 1964–65. The House will realise that the Parliamentary timetable this year, with the intervention of a General Election shortly before Easter, apart from more substantial consequences, seriously interrupted the Committee's work. It was, therefore, necessary for my colleagues on the Committee and myself to concentrate our attention on a fewer number of reports and accounts than is our normal custom.
However, we sought to deal with all the issues of major importance which arose on the relevant Report from the then Comptroller and Auditor General and, as a result of very strenuous efforts by the Committee, if I may say so, I do not think we have failed to cover anything of substantial importance. But I stress that this involved very consider-

able obligations on the members of the Committee in addition to the duties which fall on all of us as hon. Members, and this is, perhaps, a factor to be taken into account by those contemplating the setting-up of further select or specialist committees.
I think that it follows from what I have said that the scope of the Public Accounts Committee is very wide. Not only do we deal with the Reports submitted by the Comptroller and Auditor General. We also have the right and duty, when appropriate, to look at all accounts which, by Statute, are laid before Parliament. May I take this opportunity of stressing that that includes the accounts of the nationalised industries. If I may refer to an earlier observation of the Postmaster-General, we do not regard the discharge of the duty in that sphere as what he described as "theoretical".
The work of the Committee to which this report relates refers to its normal work on the reports and accounts of the year. I would, however, invite attention to the third paragraph of our Report which relates to a separate and distinct matter. We say there that the previous Committee
were of the opinion that it would be fitting for the Committee of the following Session"—
that is, the present Committee—
to review the working of the University Grants Committee control system and the extent to which the Government participates in it, and the continued exemption of the expenditure on universities from accountability to Parliament.
We say further that the Committee intended to consider this after the Summer Adjournment.
That Report was completed in the summer, and, though it would be inappropriate and, I would guess, out of order, if I were to tell the House how the Committee is getting on with its review of the question of university accountability, I think that, in view of what is said in the Report, I should be in order in saying that we are at present hearing evidence and that I have good reason to hope that we may be able to present a special report very early in the new year.
Before turning to one or two major subjects of the Report, I should like to refer to a few matters which have arisen during the year. We have celebrated the


centenary of the Exchequer and Audit Department, which has served the Committee with extreme loyalty, skill and devotion. The Department is a few years younger than the Committee, but its centenary suggests that we have both reached the age of discretion.
I should like to take this opportunity to thank on behalf of the Committee the Comptroller and Auditor General and all his staff for the immense work which they do throughout the year in preparing the material on which our reports are based. I should like also to express the thanks of the Committee to Sir Edmund Compton. As the House knows, he resigned the office of Comptroller and Auditor General at the beginning of September to take up the appointment of Parliamentary Commissioner designate. As I ventured to say when the Prime Minister announced that appointment, we have lost and the Parliamentary Commission has gained an official of singular ability, force and skill. We have welcomed the new Comptroller and auditor General, Sir Bruce Fraser, an officer of very great experience and ability. I have no doubt that we shall work very closely with him as with his predecessor.
The House has before it not only the Report, but a copy of the Treasury Minute. This is the practice by which the Government as a whole through the Treasury reply to the Committee's recommendations. There is a small point of procedure to which I wish to refer. As the House will see, the Treasury Minute has been presented on this occasion in the shape of a White Paper. This has been done by the Financial Secretary to the Treasury, to whom I express my appreciation, at my request as I thought that it would be a convenient method of putting the Department's reply to the Committee's Report into a form which is easily available to hon. Members.
The old procedure was somewhat cumbrous. The Treasury Minute went simply to the Committee and the Committee then had to make a further special report to report it to the House. As the Committee itself reports to the House, it seemed to me and to my colleagues on the Committee convenient that the Treasury Minute should also be laid as a White Paper before the House. Unless the House disapproves, I have myself,

after consulting the Committee, invited the Financial Secretary to make this a regular practice.
It is not my intention, particularly in view of the observations by my hon. Friend the Member for Rutland and Stamford on a point of order a few minutes ago, to deal with all the subjects which are dealt with in what, although shorter than usual, is still a substantial Report. Hon. Members who have looked at it will, however, see that a major element in our investigations has been the Ministry of Aviation, which is dealt with on pages xi to xxi of the Report, from paragraphs 16 to 62.
I should deal first with a point which is made by the Committee in paragraphs 16 and 17 and which is of general application although it arose in respect of the Ministry of Aviation. As hon. Members will see, we draw attention to the fact that the Accounting Officer who gave evidence before us on the highly complex transactions of this Department had, when he gave evidence, been only twelve weeks in his post and was transferred to another appointment within a day of completing his evidence before us. I do not claim that we had anything to do with that, but I suggest, as we say in our Report, that this is a highly inconvenient state of affairs.
When the Accounting Officer who gives evidence before the Committee has personally been neither responsible for the events which are being inquired into nor will continue with responsibility later for putting them right, both he and the Committee are put in a position of some difficulty. The normal designation of the Accounting Officer is Permanent Secretary, and when Permanent Secretaries become rather more transient than the Ministers whom they serve, real complications arise. This must necessarily be so in the case of a Department like the then Ministry of Aviation in which very large sums of public money are involved. The Committee was fortunate that the Accounting Officer in question, Sir Richard Clarke, is one of the most distinguished and experienced members of our Civil Service and handled a difficult situation with consummate skill.
I urge upon the Financial Secretary—I know that the other side of the Treasury is very much concerned with these matters


—how very undesirable frequent changes of Accounting Officer are from the point of view of the Public Accounts Committee and, I suggest, from the viewpoint of the public service generally. I appreciate that accidents and changes make this kind of thing inevitable on some occasions, but I am glad to see that the Treasury Minute indicates an appreciation of the difficulties involved in frequent changes. I venture to express the hope that it may be possible to keep this kind of thing down to the very minimum and that future Committees may not be exposed to the difficulties with which we were faced in dealing with the affairs of the Ministry of Aviation this year.
The first part of the Ministry of Aviation's affairs with which I would like to deal is, perhaps inevitably, the Concord, with which we deal in paragraph 20 and thereafter. The first point to which we felt bound to draw attention has been the rapid escalation of costs. As we report, in November 1962, when the agreement with the French for the production of this aircraft was signed, the forecast expenditure was between £150 million and £170 million. By May 1964, the figure reported to us was £275 million, and on midsummer day this year the Committee heard in evidence that the best figure which could be given to us was £500 million.
I should say, in fairness, that the figures are not completely comparable, because we were told that the £500 million figure, unlike the earlier figures, included £80 million in respect of expenditure after a certificate of airworthiness had been granted, whereas the earlier figures were generally understood to be for production only up to certificate of airworthiness stage. Moreover, the £500 million figure contains a precise quantification of an allowance for contingencies of £50 million which was not precisely quantified in the earlier figures. None the less, when due allowance is made for that, this is a trebling of the estimated cost over a period of three years. None of my colleagues who heard Sir Richard Clarke's evidence believes that the figure will necessarily, in the final event, be as low as £500 million.
Various reasons which are set out in our Report were given to us. One is the basic change of design after the original agreement was entered into to improve the range of the aircraft to a sufficient

figure to enable it to operate to commercial standards of safety across the North Atlantic.
It is not for me on this occasion to comment generally—it would be quite inappropriate—on this project, but perhaps I may be permitted to say that it is an unsatisfactory state of affairs when the decision of one Government to initiate and of another Government to continue the development of an aircraft is taken on figures which turn out to be so seriously under-estimated as in this case.
Our Report brings out some difficulties which are peculiar to the fact that the Concord is an international or Anglo-French project. I am sorry to have to invite the attention of the House to the fact that there are a number of asterisks indicating that in the evidence relating to this matter certain evidence has not been printed. As the House knows, the strength of the Public Accounts Committee rests largely on the fact that we do not ask the House to accept our conclusions simply because we have submitted them. We submit at the same time the evidence on which they are based. Such authority as the Committee's Reports are inclined to have depends, I think, largely on that fact.
It is a necessary rule that a witness can ask to have his evidence omitted from the printed Report and it is the practice of the Committee to allow this where either national security or important commercial interests of the State are involved. Since I have been Chairman of the Committee, I have always dealt with these requests strictly and in many cases have ruled against those who wished their evidence to be excluded. But it will be appreciated that where another Government is involved and the Committee is informed that the other Government would object to publication, with substantial international repercussions, one is bound to give a good deal of weight to this. One of the by-products, as it were, of this international co-operation is that we have felt bound not to publish rather more of the evidence than we would have kept out of the published version had this been a wholly British project. In particular, we were told that much of the information was the work of an Anglo-French committee in which the French have equal rights with ourselves.
But there is a more serious and substantial point on this which arose from the fact that this is a joint international project. As the House will have observed from our Report, the cost sharing between the two countries is done on the basis of a sharing of the work, and I would invite the attention of the House to paragraph 19 of our Report:
The Committee of Public Accounts of Session 1964–65 considered that the equal sharing of work might prevent contracts being placed with the firms best able to do the work and, in view of the inherent risk of inefficiency in the arrangement, recommended that an independent investigation should be made in order that the advantages and disadvantages of this arrangement might be fully weighed. The Treasury Minute of 17th November, 1965, accepted that further studies might be useful and stated that it was proposed to invite the French authorities to participate in a review at an appropriate stage. The Ministry informed Your Committee that they did not think the stage had yet been reached at which this should be done.
I am sorry to say that the Treasury Minute submitted in respect of our present Report still expresses the view that that it is
premature to proceed to this review without further experience of the arrangements in operation.
I would express regret at that for two reasons. First of all, this is a new arrangement under which work is done, not on the basis of which country or which firm can do the work most efficiently and most economically, but it is allotted on the basis of keeping the expenses even between the two. It would be a most extraordinary coincidence if that in fact worked out, so that the cost of the work being done was on the most efficient and most economical basis, and I would have have thought that that unusual arrangement did require very early inquiry into both because very large sums of public money are now being spent on this project, and also because it has been treated, and rightly, as the prototype of further projects based on international co-operation. I hope that when the Financial Secretary replies he will be able to tell the House why he feels once again, for the second year in succession, that the Treasury or the Department think it is premature to undertake this inquiry and that he can give us some indication as to when it is likely to be undertaken.
There is, of course, a further complication with which he might deal. In an aircraft designed for the international market—and it is hoped, we were told, to sell it not merely to English and French but to other airlines—there are very often items of equipment which are not best produced in either country but where standard equipment, for example, in instruments, comes most acceptably from a third country. It is not at all clear how such purchases can be fitted into the particular arrangements which I have described. The House will very well appreciate that it would really be ludicrous if, as a consequence of this, instruments less than the best were to be fitted into an aircraft which, if it is to be the success we all hope it will be, will be the leading aircraft of the world's airlines in the 1970s.
The House will not want to underrate—and I should say this in fairness after what I have said—the immense problem involved in developing a civil aircraft which at one jump takes operating speeds from about 600 m.p.h. to about 1,400 m.ph. and which at one jump takes operating heights from 35,000 ft. to 65,0000 or 70,000 ft. If I may interpose a personal matter, I did have the privilege the other day with the Parliamentary and Scientific Committee of seeing the devoted work being done at Farnborough and at Filton, on this aircraft, and the very great scientific effort being expended on it.
However, its development cost is very high, and in fairness to the taxpayer some inquiry of the kind our Committee recommended really should be undertaken in the near future. I would also, in fairness to the taxpayer, urge, as the previous Committee did, that more attention should be given to the recovery of some of these development costs from purchasers, if the aircraft is the success which the courage and enterprise which have gone into it entitle it to deserve.
I will say less about the other aircraft mentioned in our Report—comparatively little about the TSR2, partly because in the circumstances it would not be necessary for me to enter into a project which has been abandoned, partly because the Treasury Minute itself admits a mistake was made in respect of the engine contract and indicates some lessons have been learned from experience with this aircraft.
I should like to say a little about the militarised version of the VC10 which is dealt with in paragraph 53 of our Report. The Committee was informed that the military version of this highly successful civil aircraft—at the moment, as I understand it, the most popular and efficient civil aircraft in the world—costs £1·4 million extra in respect of each of the 14 military aircraft ordered. There was one figure which particularly intrigued the Members of the Committee, particularly one of my colleagues who happens in private life to be a publisher, and that was that the manual which, as the House knows, accompanies every aircraft, military and civil, will, we are told, cost £56,000 in respect of each set of documents. When it is appreciated that a manual of the civil version already exists it will be understood why we were very concerned that the production of a set of documents in respect of aircraft with military adaptations would cost £56,000 for each set, and that figure seems an extremely surprising one.
Apparently, the Financial Secretary, at any rate, is inclined to the same view in the Treasury Minute, because it is there stated that the Government are not committed either to the total figure of the aircraft or to the particular figure for the manual.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): In view of the fact that the right hon. Gentleman's remarks may get reported some substantial time before I have the chance to make a speech in reply, I think it only fair to the House to point out that this is not one manual but a very large number of manuals.

Mr. Boyd-Carpenter: Oh, yes, we saw the pictures of it. It is quite a library; but, on the other hand, while I do not know on what scale the hon. and learned Gentleman's library is, I hope I am not casting any reflection on his financial standing in suggesting that it does not run to £56,000. I am very glad to see that the Treasury Minute indicates that the Ministry is not committed to that quotation or to any of the details which it contains.
I pass to another aspect of our Report, in paragraphs 89 to 92 of which we deal with shipbuilding for the Royal Navy. Our Report deals at some length with the

experience over the building of frigates in recent years. It has been the practice under the present Government, as it was under the previous one, in general to lay down three frigates of the same class each year. We therefore undertook an examination of the reason why the cost of the frigates put out to contract appeared to be substantially less than that of frigates of the same class and year which were built in the Royal Dockyards.
As our Report says, the difference amounted to figures varying between £450,000 and £750,000. When the House realises that the total cost of one of these ships runs between £4·7 million and £6 million, it will see that that is quite a substantial proportionate differential. But, when the House appreciates that something between a third and a half of the equipment for the ships consists of standard items supplied by the Navy Department separate from construction, it becomes apparent that the disparity of between £450,000 and £750,000 relates not to the total cost of a ship but to the total building at something of the order of between £3 and £4 million. There is, therefore, a substantial amount of public money involved.
In evidence, we were told and fully understood the desire of the Navy Department to keep the Royal Dockyards working, and that they thought it necessary for that and to provide experience that, at any rate, one of these ships should be built in a Royal Dockyard. Many of us understand the deep attachment of the Royal Navy to the naval dockyards. On the other hand, when there are disparities of this order in respect of public money, quite serious issues arise. It may be that, with the smaller Navy of today, it will be necessary to reconsider whether the same numbers of Royal Dockyards are required if they have to be kept in operation at such substantial additional cost to the taxpayer.
Paragraphs 4 to 15 of our Report deal with a different matter—the very difficult problems which arise in connection with aid to developing countries. There is quite a substantial matter arising in respect of the over-issue of £410,000 or so to Sierra Leone. I am bound to say that the Committee had the impression of some lack of effort and energy on the part of the Ministry of Overseas


Development either in securing repayment or even in securing a precise quantification of the over-issue.
On the more general aspects of the matter, the Treasury Minute indicates that the Department accepts our view of the need for more effective control in the developing countries of money which is provided from this country. If I may venture to say so, I am sure that this is very much in the developing country's interest, in that irregularities or scandals in dealing with money provided from this country could obviously affect our willingness to go on helping on the same scale; and it would be a tragedy if the work done by the Ministry of Overseas Development should have to be diminished because proper financial controls did not exist in the recipient countries.
The Government appears to accept that view and are trying to help the developing countries in the best possible way to get efficient systems of control by lending them skilled officers to put proper systems into operation. The Government accept also the view of the Committee that, wherever possible, assistance to the budgets of developing countries should be by way of block grants rather than by way of deficiency payments.
After all, if one is told that a budget deficit is to be made up by someone else, whatever it is, plainly there is less incentive both to improve one's own taxation system and to expend the money economically than if one is given a fairly calculated block grant and knows that if one lays it out well and skilfully and contributes to it oneself, one will get more development. In general, the Treasury Minute indicates acceptance by the Government of the Committee's recommendation.
Then if I may touch briefly on one or two smaller items. As a result of an investigation of the accounts of the Agricultural Research Council, the Committee was very much impressed with the need to have proper financial controls and arrangements when research councils enter into commercial arrangements with outside firms. The particular case which came before us involved the Agricultural Research Council in losing £240,000 of public money on the manufacture of an animal vaccine which cost £407,000 to

produce. That is a substantial proportionate loss. It was plainly due to the Council's failure to take advice from the Treasury about proper commercial arrangements. It is apparent from the Treasury Minute that arrangements are being made to secure that, when research councils go into commercial projects of this kind, they will take early Treasury advice.
Inevitably, we looked at the question of drugs for the Health Service and the arrangements with the pharmaceutical industry. As the House will see, the Committee took into account the fact that the Government have appointed the Sainsbury Committee and thought that it would be as well to reserve judgment on the system of voluntary price control until we have the Sainsbury Committee's report.
This debate normally is not long or controversial, but the House has taken the view for many years that it is proper that the work which is done on its behalf by the Exchequer and Audit Department and by the Public Accounts Committee should be duly reported to it, and I ask the House to take note of these Reports.

4.7 p.m.

Mr. Frank Judd: I wish to draw attention to paragraph 89 of the Second Report, on page 28, dealing with the Dockyard Accounts and the cost of new construction. I have a certain divided loyalty in this respect, being both a member of the Public Accounts Committee and representing one of the Royal Naval Dockyard constituencies.
Anyone who has read this part of the Report carefully must have done so with a feeling of the grave significance contained in what is said by the Committee. In the dockyards, we have large resources of manpower, estimated at something in excess of 35,000 men. The dockyards include a high level of skill and craftsmanship in the personnel employed, and there are considerable resources of capital equipment in them. Altogether, the yards are amongst the nation's largest industrial undertaking.
In what the Committee has to say about the cost of construction of frigates, it is relatively alarming to notice that the extra cost involved in construction within the naval dockyards may be something


between£450,000 and£750,000 in excess of the cost when built under contract. The inadequacy of the explanations for the difference suggests that an exhaustive inquiry into the efficiency of the yards would be justified.
To say that is not to get things out of proportion. Unfortunately, in the Report of the Public Accounts Committee, there are references to even more alarming escalations, as its Chairman has already suggested. We have also to recognise the special problems of the yards. They have what might be termed a garage function. They must be ready constantly to deal with unexpected work, and they must do that in addition to their role as production units. All the time, they must have surplus capacity available to deal with any emergency which may arise.
Thanks to the help and co-operation of the Ministry of Defence and the local dockyard management, I have had the opportunity during recent months to make some fairly extensive visits to the dockyard in my constituency. It has been said that the yard's history is just like Topsy, "it just growed" over the centuries. It could be described, I think, without being unkind, as a rambling wilderness with a generous inheritance of thoroughly archaic facilities. Already there is a certain degree of impressive modernisation and new building going on, and there are impressive plans for a streamlined rationalisation of its administration, but as yet it is far from being an ideal basis for competitve efficiency.
The structure of its administration—and I suspect that this also applies to other yards—is also conspicuous for its haphazard evolution, although, again, important steps are being taken to improve the situation. At the moment it is conspicuous for an apparently growing army of administrators, with some inevitable duplication, if not confusion, between Service and civilian staff.
I think that in the form of management we see the traditionally impersonal attitude, the use of Whitley Committees not in the sense in which more modern industries would use them, as a means of genuine consultation, but, much more, simply as a means of informing workmen what is planned, and discussing at great length such items as lavatory facilities.
There is imperfect communication within the yard, and this results in a bad

state of morale about what is planned for the future. There is too much formality in the relationship between management and employees. There is too much of what might be described as a quasi-commissioned versus non-commissioned officer relationship, even among the civilian staff. What we should have in place of this in modern times is an essentially dynamic attitude of team work.
In fairness to the local management, I think that it must be said that not enough power is delegated to the local level, and consequently not enough power is delegated to the individual departments within each yard, and this does not compare well with the flexibility and drive which one finds in industry elsewhere, even within the neighbourhood of the yard.
Morale is not good, and this is reflected in the drift of personnel from the yard. I think that this is affected very much by the rather unfortunate wage structure which exists there, a wage structure which puts an undue emphasis on incentive schemes. There used to be the job price contract scheme, which became thoroughly discredited, and which has been followed by the dockyard incentive bonus scheme. Putting too much emphasis on this sort of scheme, instead of recognising the need for a fundamentally adequate basic pay structure, results in a general atmosphere of concern and uncertainty, and it is not encouraging for all concerned in the yard to find that even last week the Ministry of Defence for the Royal Navy was denying the need for a reinvestigation of the incentive scheme. This must affect overall efficiency, and I think that there is a tremendously urgent need for the implementation of the suggestion put forward by the Prices and Incomes Board for a reorganisation of the pay structure.
At a time of economic difficulty in the country, the Government very rightly urge the priority of productivity. I think that those who know the yards would suggest to the Government that they have an important duty to give a lead by looking to productivity and conduct in their own sphere of influence. There is undoubtedly under-used capacity of manpower and capital equipment in the yards. This is wasteful in itself, and it has long-term damaging effects on the morale and efficiency of all concerned.
If we seek more dynamic, imaginative, thinking about the yards, one of the early points for consideration must be a greater use of civilian contract work. It has been suggested by the Prime Minister that work might be done within the naval dockyards for overseas development. It has also been suggested by some that the yards, with their engineering traditions and ability, would be able to make an important contribution to the pre-fabricated housing drive in the country. If the yards were to undertake more work of this kind, it would help them to reach a pitch of efficiency which would make competitive tendering for the construction of naval vessels a more viable proposition.
That will, of course, involve policy changes. It will mean the yards being held to the estimates which they make for civilian contract work, and there will also have to be a revision of the present procedure whereby any civilian contract work being undertaken in the yards involves those asking for it to be undertaken signing away almost all their rights to compensation.
But far more important perhaps than even that consideration is the need for a complete reorganisation of the administration of dockyards in Britain. They need to be disentangled from the other important functions of the Admiralty. There is a need for a higher degree of autonomy and independence, and I think that here we might make comparisons with the proposals being put forward for the Post Office.
I think that we all recognise the contributions made to the nation's defence in the past by the dockyards, by their personnel working there, and by their surrounding communities, but I think that we must also recognise that almost all the communities surrounding our dockyards lack any large-scale alternative industry. There is, therefore, a need for drastic action to ensure the future health and viability of the yards and their communities, to secure the services of their whole potential for the nation. This is particularly relevant at a time of general economic difficulties.

4.17 p.m.

Sir Henry d'Avigdor-Goldsmid: This is the first time that I have had the pleasure of joining in a

debate on a Report from the Public Accounts Committee, and I do so with a due sense of the arduous work undertaken by the members of that Committee, its staff and its Chairman. My Committee work has been on a lighter scale, with the Estimates Committee, or with the Nationalised Industries Committee, neither of which is as well equipped with staff as the P.A.C., and therefore perhaps our reports differ in depth.
There is one part of the P.A.C. Report to which I should like to call attention, because the Chairman, for good reasons, skated over it. He told the House that his Committee was at the moment deliberating the question of university accountability, and I appreciate that in those circumstances he does not wish to prejudge the issue. However, not being a member of this august Committee, I do not find myself similarly bound, and I should like particularly to draw attention to paragraphs 70 to 78 of the Second Report.
That part of the Report refers to a fund created by London University out of public funds for the development of Bloomsbury No. 2 site. This fund has existed for a number of years. The P.A.C. called attention to it in 1953, since when it has dropped out of sight, and in fact paragraph 75 of the Report says categorically that
the matter had been completely lost sight of.
It goes on to say:
The University Grants Committee had recommended grants for building developments on the estate in complete ignorance of the existence of the Fund and of the amount of money in it. Your Committee were informed that had the University Grants Committee been aware of the existence of this fund the amount of the grants to this University might have been affected.
No one, least of all myself, is suggesting that improper use has been made of this fund by the University of London. This is another point relevant to the need for university accountability. I notice that the Treasury Minute ends up with the words:
The Treasury and the Department of Education and Science are confident that the steps now taken will ensure that the Fund is used, whenever appropriate, for the purposes laid down in the loan agreement.
I have no doubt that the cat has been well and truly belled and that this fund is now brought into the realm of


public accountability. It must raise in most of our minds doubt as to whether among the other universities similar funds of one sort or another do not still exist. I notice that in reply to Question 148, Sir Herbert Andrew, the Permanent Secretary of the Department of Education and Science, said:
The responsibility rested with the Treasury to the end of 1963. The responsibility for this Vote came to the Department in 1964, and no one concerned with the Universities Vote was aware of the existence of the agreement. So that the answer to your question is that no arrangements were made to watch over the use that was made of the fund.
I quote the following question from a member of the Committee, and the reply of Mr. Copleston, the secretary of the University Grants Committee:
… there is no question of them getting in that year an extra £600,000?—In respect of that year, yes.
This leads me to a slightly wider issue, which is this question of university accountability. This is a matter which came up very much in the course of the inquiry which I had the honour of conducting for the Estimates Committee on university grants. In a Public Accounts Committee debate on 7th December, 1965, at c. 278 of Vol, 722 the Financial Secretary is on record as saying:
There is no doubt that we want to see that the most up-to-date techniques of control and management are employed. This is not always an easy matter, … and it does not follow … that these things would be better achieved by making the University Grants Committee accountable to Parliament or that they ought to be gained—if they would be so gained—by any restriction of academic freedom."—[OFFICIAL REPORT, 7th December, 1965; Vol. 722, c. 278.]
On this question of academic freedom, we dwell in a realm of great imagination. I should have thought that most of us would accept, in terms of academic freedom, the definition of the late Sir Hector Hetherington, who said this:
I think it vital that the universities should each retain full responsibility for its own appointments: that it alone, subject to the ordinary law of the land, should choose its teachers, should settle the conditions of their tenure, and should, if need be, dismiss them. That is the primary condition of University freedom, and the only ground of assurance that its members may speak and teach in whatever way they are responsibly led to do.
Those are admirable sentiments. The defenders of academic freedom should concentrate on seeing that is achieved in

these terms. That great man, Lord Robbins, in an address which he delivered and which was published by the British Academy, said:
A university which has to submit to some central office proposals for the switching of small funds from one object to another—the appointment of a research assistant in place of expenditure on the time of a computer, for instance—is certainly not free".
I think this is an exaggeration. I questioned Lord Robbins on this and he said that I quoted him slightly out of context. The defenders of academic freedom outside this House seem unable to differentiate between the big issue referred to by Sir Hector Hetherington and those smaller issues into which Parliament inquires.
In reply to Lord Robbins I said:
The Robbins Report brought university policy for the first time in our history within the ambient of the concept of social justice. After all, the whole basis of the Report was that, quite apart from manpower needs, all those who were properly qualified for a university education should have the chance of receiving one. But it is no good advocating social justice and then complaining because people start asking whether the same justice is being meted out to universities as to, say, technical colleges and colleges of education; once one explains that universities are not just private autonomous institutions but that they also exist to serve a definite educational and even social purpose, then their whole position in the body politic is changed.
That is true. The universities in the last twenty years have changed completely. They are now drawing more than £200 million a year from the public purse. We know that their fees amount to only 10 per cent. of their expenses. They are part of a national welfare policy and I am quite sure that we can somehow bring them within a national financial policy. They will, in fact, be included in it whether or not they desire it. It is inevitable, when there is this continuous demand on resources, when the universities are competing inside the department for funds with institutes, not of high education but of secondary and primary education. It is clear that they are part of a national system, and they should be subject to the same sort of financial disciplines.
I make this point because it was not touched on by the Chairman of the Committee, for a very good reason. It does seem that the point needs emphasising. The development of the


universities over the next few years will be tremendously inhibited if they do not carry with them the confidence of this House. This matter has brought up the existence of a fund in the London University hitherto unknown to the Treasury and the Department of Education and Science. I recall that in the Sub-Committee's Report we found there was a special computer account. I quote from column 231 of the debate of 26th January, in which I said:
… it looked as if, at the end of the road, London University would have received by the back door the additional£1 million which, when it had applied for it overtly, had been refused to it."—[OFFICIAL REPORT, 26th January, 1966; Vol. 723, c. 231.]
I mention that, not as an attack on the London University—these institutes are deserving of the highest praise—but there must be recognition in the higher academic circles that the submission of their accounts to the Department of the Comptroller and Auditor General does not automatically result in the admission of a secret police; otherwise they will not have the confidence of the House to the extent that it will be necessary if they are to receive the grants which all of us know they do need and for which they are now applying. That is the sole purpose of my intervention.

4.28 p.m.

Mr. Edwin Brooks: The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) gave a most interesting speech, and one whose contents will not have fallen strangely on the ears of the Public Accounts Committee at this moment. I am sure that the hon. Gentleman will understand that members of the Committee will feel rather constrained in developing some of his points at this moment in view of the very delicate and important discussions which are now taking place before the Committee. I would refer to the speech of the Chairman of the Committee, the right hon. Member for Kingston upon Thames (Mr. Boyd-Carpenter), who referred to this year being the centenary of the Royal Assent being granted to the Exchequer and Audit Departments Act of 1866.
This has been a century of very notable achievements. The experience of the workings of the Comptroller and Auditor General's Department has been one of

relevance not only to this country but to many others who have moulded their own practices in some measure upon it. We have had a department established in which the scrupulous sniffing-out of anomalies and maladministration by the Comptroller and Auditor General has been the olfactory instrument for the functioning of the watchdog rôle which the Public Accounts Committee traditionally performs.
I am less of a watchdog than a watch-puppy, having yet to celebrate my first year's membership of the Committee, but I want to say how, as one of the new Members, although a watchpuppy I am certainly not a hush puppy, due largely to the encouragement which the Chairman gives to all Members of the Committee in our questioning of witneses who appear before us. I also associate myself with the remarks which he made about the former Comptroller and Auditor General, Sir Edmund Compton, as well as his successor, Sir Bruce Fraser. I also want to express my appreciation of the valuable work performed by Dr. Taylor as Clerk and the assistance given to us by Mr. Platt for the Treasury.
In reminding the House of this happy blend of expertise and thrustful inquisition, we may be hinting at one way in which effective Parliamentary reform—notably to ensure that a detailed surveillance of the executive is carried out; something which has never been more necessary than at this stage in our history—might be prosecuted. We have in the Public Accounts Committee the experts, or the accounting officers, for the great spending Departments of State, being interrogated by the laymen—the politicians, who lack technical expertise but are able to perform a most useful function because of their access to the findings of clearly independent experts.
In our concern about Parliamentary reform this aspect might be stressed, not least for its relevance to the information and help clearly required by those hon. Members who might find themselves—I hope in the not-too-distant future—serving upon a Committee responsible for the surveillance of science and technology. But in reminding ourselves of this long and fruitful partnership between the Comptroller and Auditor General and the Committee of Public Accounts, we are bound to speculate about the rôle of such


an auditing department and its Parliamentary component in the years ahead.
As the Chairman has already indicated, and as he said in the debate which took place on 7th December, 1965, the Public Accounts Committee has considerably wider functions than were originally envisaged.
It now makes what I might describe as an efficiency audit and is concerned very much … with securing that the public, where there is public expenditure involved, secures value for money."—[OFFICIAL REPORT, 7th December. 1965; Vol. 722, c. 257.]
The powers and the rôle of the Committee of Public Accounts are even wider, as my right hon. Friend went on to elaborate on that occasion. I want to suggest tentatively several ways in which the next few years will inexorably demand fresh and perhaps revolutionary thinking in our approach to national auditing and its Parliamentary components.
The first point is that the relationship between financial inquisition—that is, the search for "value for money" and the inquisition which takes place—and the areas of policy and decision-making by the Government of the day is a complicated one. The speech made by the hon. Member for Walsall, South illustrates some of the complexities involved in defining this relationship in relation to the universities. We are discussing the problem of university accountability at this moment, but it would not be revealing any secrets if I mentioned that one of the aspects that we are focusing upon is the extent to which we can divorce the problems of financial methodology from the day-to-day matters of detailed surveillance which fall essentially into the academic province of the universities. However impossible it might be to define these areas—methodology on the one hand and policy-making on the other—it is quite obvious that policy itself is bound to stem in large measure from the type of cost-accounting involved.
Paragraph 45 of the Second Report, referring to the TSR2, says:
it seems to Your Committee that all concerned were at fault in not securing the earlier introduction of an adequate system of recording and reporting costs against physical progress to enable policy decisions to be made on the basis of up-to-date information on the financial effect of the technical problems encountered.
It is obvious that the function of policy itself must in large measure stem from the

financial evaluation which is taking place from time to time.
There is the more spectacular case of the Concord project, to which the right hon. Gentleman has already referred at some length. I want to develop one or two points that he has already made. The House must inevitably ask itself whether such a venture would have been embarked upon at all had the extent of the cost escalation now revealed then been properly foreseen. Here again, there is an obvious relationship between policy over a period of time, and the degree of cost effectiveness in measuring the choices involved at any moment in time.
There is another aspect of the Concord problem, which also illustrates a larger problem which the Committee of Public Accounts inevitably comes up against. Does this inquiry—the questioning which it carries out with witnesses—extend well beyond the proper limits for which the Committee is essentially designed? Where a witness appears the questions can obviously range very widely. But it is very often difficult to know where one is transgressing the procedure of the Committee. In this context I want to refer to one aspect of the Concord project which arouses a good deal of public interest and concern, namely, the problem of sonic boom. In Question No. 921 of the Minutes of Evidence taken before the Committee of Public Accounts, there is reference to the evidence given by Sir Richard Way on 18th February, 1965, before an earlier Committee of Public Accounts, when, in reply to Questions 734 and 737, which dealt with sonic boom and tolerance levels, Sir Richard Way said:
We hope to have a very much clearer idea of this problem within two years.
When this point was raised almost 18 months later with his successor at the Ministry the following answer was given, to Question No. 922:
We certainly cannot in the next few months have a clear statement of this situation. I doubt whether we shall have a clear statement of this situation for a very long time because this is a very difficult issue. It is not a straight 'yes' or 'no' situation.
One appreciates the difficulties involved, particularly for accounting officers, in answering questions of an essentially technical and highly sophisticated character.
Yet it is fairly obvious that the whole financial validity of a project like Concord must largely depend on whether or not the plane, once in the air, can be tolerated, or whether the sonic "boom" problems which it creates will make life for those on the ground utterly intolerable. Here again, I am straying from the strictly financial surveillance to the wider problems, which I do not wish to go into any further on this occasion.
This, however, takes me to a larger aspect of the difficulty of the problems involved in defining the rôle of the Committee today—to what extent its work transgresses upon or laps against the work of the Estimates Committee. The whole discussion on Concord and the escalation in costs involved arose out of a question on 21st June, when the Accounting Officer was asked by the Chairman of the Committee:
May I first of all ask you, Sir Richard, when the Committee in the 1964–65 Session dealt with this matter, the figure before them for the foreseen total cost of the project was £275 million. Does that figure still stand?
Clearly, at that stage, the question referred to that year, for which audited reports have been presented or are to be presented to Parliament.
However, the answer given now involves reference to up-to-date estimates which one might argue are not strictly within the purview of the Public Accounts Committee. Indeed, this exchange went on to show that costs had escalated to £500 million. I certainly would not argue that we should have some theological argument about where the limits are to be drawn. The important thing is that the public and Parliament should know what is going on. From this point of view at least, the question of which Committee finds it out is irrelevant.
But the problem, in any case, is inherent in the situation today, where we are dealing with the costs of development projects which extend over very long periods. The control of costs over such long periods requires not simply a posthumous evaluation of costs already incurred, but must be a rolling inquisition which can measure forecasts against achievements and test the forward estimates of any one financial year by the revisions which take place in succeeding years.
The original cost of Concord was, as the Chairman of the Committee said, between £150 million and £170 million. The revised figure is now £500 million. Clearly, the testing of whether or not the controls on cost which were being attempted in earlier years have been effective depends on the extent of the published escalation in costs.
I wish to turn to one point which concerned many of us on the Committee, and perhaps has rather a wider implication than the merits or demerits of the case. This is whether or not it was right to publish the detailed figures. Hon. Members will know that on Thursday, 28th July, 
It could have been argued that to provide possible competitors of this supersonic airliner with that kind of precise and at that stage, confidential information was misguided, and that the Committee should instead have been content to settle for the more general wording. I was one of those who voted to publish the figure of £500 million, and it is important to state why I arrived at this decision. It could be argued that, if the Committee were to publish information for which a request had been made by the Accounting Officer, for "sidelining" this would in future inhibit the retailing of information to the Committee which it might find useful and important.
Let us look at the sequence of events. The last figure given to the House dated from May, 1964, and no new official figure had been issued to the House or the public during the lifetime of the present Government since their Election in 1964. I recall the poignant words of the hon. Member for Woking (Mr. Onslow), whó said in the House as recently as 9th February last, with reference to the Concord:
… the rising costs must worry us. A figure of £400 million has recently been quoted


as the cost of research and development to the point of production of Concord. Probably a more responsible estimate would be nearer to £350 million".
That "more responsible estimate" was given to the House as recently as 9th February. Within three months of that responsible view, as it was then thought to be, a fresh estimate was being put forward of £500 million.
There are some perplexities about this figure. If the House will bear with me, I should like to point out one or two of the problems which have not, even now, been adequately sorted out. For example, before that meeting of the Public Accounts Committee at which the decision was taken to publish the figure of £500 million, there was a meeting in the House, on 19th July, at which figures were supplied by the British Aircraft Corporation, for which other hon. Members who attended the meeting can vouch.
These were as follows. The airframe costs estimated as of November 1964 came to £181 million, of which B.A.C. contributed £71 million and Sud-Aviation £110 million. The B.A.C. engine estimates for a later date—April 1965—came to £139 million, of which the British contribution was £87 million and the SNECMA contribution £52 million. This made a total of £320 million for airframe and engines.
Hon. Members present were also informed that to this figure was to be added an estimated £36 million for post-certification work on the airframe and another £27 million for similar work on the engines—a total of £63 million. The House will note that this is £17 million less than the £80 million post-certification estimate of the Minister announced in early September, which was given to the Public Accounts Committee some months earlier.
An even wider discrepancy is seen in a comparison of the figure of £15 million given by B.A.C. as contingencies on airframe with the £50 million given by the Minister two months later, although I accept that the £50 million will presumably include contingencies on engines, which were specifically not included in the B.A.C. figure. The £50 million for contingencies, in addition to this enormous figure of £80 million post-certification work—a;figure immeasurably higher than

anything which could have been contemplated when the original agreement was signed in 1962—seems to require some explanation.
It is interesting that, even when the B.A.C. estimates of post-certification work and any contingences on the airframe are included in their global estimate as of July last, the total is only £398 million. This was presumably the figure encountered by the hon. Member for Woking when he referred to "about £400 million". There is still a discrepancy of about £100 million with the final estimate of September. This discrepancy cannot be explained by adding the post-certification and contingency sums, which we all recognise were not included in earlier official Ministry estimates of development costs. That is made quite clear in previous reports of the Committee of Public Accounts. I take slight issue with the Chairman of the Committee, because it is not clear, at any rate to me, that the £50 million added for contingencies is simply, as it were, grossing together a mass of isolated and scattered figures which had already been included in the figure of £275 million given in May 1964.
There is a problem here, because in reaching our£398 million we have already included£78 million of the£130 million which the Minister added on under these two heads in September. At best, we can add only another£50 million or so to our£398 million, and that still leaves us £50 million short of the £500 million total. Where does the difference lie? There is another problem, because in the report dealing with the revised estimate of £500 million given in The Times by its air correspondent, we find that 80 Olympus 593 engines are included in the£500 million. I have searched in vain in the Minutes of Evidence to clarify this point, and I would like it clarified.

the Committee divided upon the Question, "That the words proposed to be left out should stand part of the Paragraph". The argument was whether or not Paragraph 21, which now stands in the Second Report of the Public Accounts Committee, should remain in or whether it should be changed for wording which did not state a figure of £500 million. The alternative wording would have indicated a massive and alarming increase in the total cost.

Mr. John Rankin: I apologise for interrupting my hon. Friend, but I think that we were both present at the meeting to which he refers, and we have discussed the matter. In the break-up of the total figure he has given, does he remember that the stretched version produced £50 million more in cost which might fill the gap of which he talks?

Mr. Brooks: With respect to my hon. Friend the Member for Glasgow, Govan (Mr. Rankin), I think that he will find that the escalation of costs which had already taken place between November 1962 and May 1964 took account of the implications of the stretched version. Therefore, this cannot possibly be included as an explanation of the increase which took place from May 1964 to May 1966 and we are back to the problem of the 80 Olympus 593 engines.
Why have these been included in the estimate of£500 million? It seems odd to include certain items such as these and not others. I am not sure of the rationale. Were they included in the mid-1964 estimate of £275 million? That was the figure then estimated as necessary to bring the aircraft to the standard required for initial certification in 1971, and this confirms the point I was trying to make to my hon. Friend a moment ago, that the figure of £275 million already included the stretched version. If they were included in the revised cost of £275 million their cost must also now be included in the revised figure of £370 million which the Minister put forward in September as relating to the £275 million earlier estimate.
That would still leave some very odd discrepancies, since a substantial part of the escalation in engine costs between 1964 and 1966 had already been accounted for in the B.A.C. estimate which the House may recall was as for April, 1965, on the figures then made available to us—I stress that they were made available to us openly and frankly by representatives of B.A.C. Those of us on the Committee were placed in a very curious dilemma. We were being supplied with figures which came to something less than £400 million, although we already knew from information given us on inquiry that the estimate was around£500 million. It seemed to me, if only to try to define why discrepancies like this have arisen, that it was important that the figure should be published, and that there should be full public discussion of what is involved. I suggest that any increase in engine costs reflects cancellation of TSR2. I strongly suspect that this has happened.
I have developed this point at perhaps greater length than the House would have wished, but I feel that this is a matter of

some public concern and public interest. [HON. MEMBERS: "Hear, hear."] It is inevitable when we become involved in financial intricacies of this sort that many of us, particularly the laymen on the Committee, should feel rather bewildered and rather helpless. But in the kind of project which Concord implies, involving a highly sophisticated technology, and being, perhaps, the prototype of many such ventures upon which this country will embark not only with France but with other members of the European community in years to come, it is very important that the House should recognise some of the difficulties involved in even finding out the details, let alone controlling the escalation in costs.
It may well be that we shall now, as we approach membership of the European community, find ourselves having to recast very profoundly the whole relationship between the audit departments, not only of this country but of other countries with whom we shall be in joint co-operation, and the Parliamentary institutions of those countries within the Common Market.

4.56 p.m.

Mr. John Biffen: The hon. Member for Bebington (Mr. Brooks) spoke in felicitous terms of the work of Sir Edmund Compton and Sir Bruce Fraser and also of our Chairman, my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and Dr. Taylor and Mr. Platt. I join with him in those tributes.
This is the annual occasion when the work of the Committee of Public Accounts is shared with the House but I must confess, as I look around, that it is substantially a reconvening of the Public Accounts Committee on another day in another location. I was surprised that my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) should have sought Mr. Speaker's guidance about the length of speeches, because I was approached by the Whips before the debate began with earnest inquiries as to the expected length of my speech on the grounds of a basic minimum requirement. [Laughter.] It is not my intention to enlarge upon that, because I know that the hon. Member for Glasgow, Govan (Mr. Rankin) is so much more able than I could be in these matters.
There are three points on which I would like to dwell. One is, in general terms, the work of the Committee of Public Accounts and some implications it may have for us in our consideration of the work of specialist committees. Secondly, I wish to dwell a little on the work of the Royal Naval dockyards, which was touched upon by the hon. Member for Portmouth, West (Mr. Judd), and finally on the matter which undoubtedly exercised us most in the Committee, the story of the development of the Concord aircraft.
The hon. Member for Bebington felt that our experience on the Committee gave encouragement to the idea of an increase in the work of specialist committees. I am not sure that I agree with him, on severely practical grounds, because there is no doubt that whilst the work of the Committee is fascinating—I think that all Members of the Committee will agree with me that probably this must count among the most absorbing of all our Parliamentary work—it is none the less very time-consuming, and competes with a great many other demands on Parliamentary time. It is therefore hardly surprising that for eight of the 13 sessions covered by the First and Second Reports no more than half the Committee were able to attend. I am not in a position to cast stones about this, and I do not seek to do so, but I am making the point that should be made that there are very real difficulties in providing the Parliamentary time to deal with these Committees. I am by no means convinced that it will be possible to find people able to give the necessary time to pursue the work of specialist committees with the detailed application which it would deserve. I make that as a severely practical point. There are other issues which, in my view, invalidate the case for specialist committees. I believe that, ultimately, it should be the purpose of Parliament to bring controversy on to the Floor of this Chamber, and specialist committees could well militate against this.
My second point concerns the dockyards. The hon. Member for Portsmouth, West, very naturally, explained his constituency interest, but I confess to some alarm on hearing him suggest that the dockyards might take over some of the work on prefabricated housing. This is

another application of the principle of finding available work to meet surplus capacity, a very dangerous enterprise to undertake without very considerable market research and detailed consideration of all the evidence on whether or not it can be profitably carried out. I earnestly ask the hon. Gentleman, before the idea is pushed a great deal further, to consult people such as Hawthorne Leslie, a company which has had a singularly unfortunate experience in trying to convert its shipbuilding facilities into capacity for the construction of industrialised housing components.
Our discussion of the dockyards threw considerable light on the term "productivity", now one of the most overused words in our political vocabulary. The argument was put forward that productivity had been increasing in the dockyards at about 2½ per cent. per annum, but the evidence which became apparent during questions was that this was the increase in output compared with the amount of labour employed. It took no account of the amount of capital employed. The real test of productivity, presumably, must be higher output from the same joint resources of capital and labour.
The difficulties explained to us by Sir Michael Cary about the measuring of productivity seemed to me to be fairly patent and obvious. His answer to Question No. 577,
The difficulty is that we have not found any way of measuring Dockyard output. This is my basic problem",
not only struck sympathy in the minds of those who heard his evidence but would, I am sure, be echoed by every manufacturer in this country who finds it extraordinarily difficult to measure the various components of output within his factory.
I hope, therefore, that the evidence will be pondered long and earnestly by those who are now making productivity or productivity agreements some kind of touchstone in the prices and incomes policy. I suspect that the word "productivity" is capable of bearing more nonsense than almost any other word which we bandy about.
I turn now to the Concord. The case elaborated by the hon. Member for Bebington is very powerful indeed, and


I endorse his observations. Many of us—I am delighted to see the hon. Member for Govan in his place—had doubts about the project right from the start. I well remember an Adjournment debate on 21st December, 1962, which was initiated by the hon. Member for Govan. It makes rather interesting reading, and I refreshed my memory on it only this afternoon.

Mr. Rankin: So did I.

Mr. Biffen: No doubt. I know, from seeing the pages open on the hon. Gentleman's knee, that he has exactly the volume with him, and I hope to pinch some of the lines before he has a chance to use it. It seems that, even if we are not being non-partisan, partisanship does not run along conventional lines. I think that the prize must go to my hon. Friend the Member for Banbury (Mr. Marten), then Parliamentary Secretary to the Ministry of Aviation, when he said:
I believe that we must grab this opportunity with both hands and dash away with the prize."—[OFFICIAL REPORT. 21st December, 1966; Vol. 669, c. 1657.]
Everything that has happened since has underlined all the doubts which were expressed on that occasion about whether there was any likelihood that the development costs could be fully recovered. The fact now that, as the Report of the Public Accounts Committee shows, probably not more than one-third of the development costs will be recovered, must lead us to a very severe and searching inquiry into the entire project, not in the sense of a malicious post mortem to see how all the money was spent and not to score too many party points—in the result, there will be questions of comparative negritude between pot and kettle—but mainly into the implications of the accounting questions in a project of international character.
This Anglo-French project was itself a pioneer, not merely a pioneer technologically but a pioneer in joint Government operation. If we are unable to face a severe scrutiny of the lessons which this project shows for us, then the many hundreds of millions of pounds will have been wasted merely as forerunners of subsequent waste of a similar pattern.
I still believe that we are right to be severely critical that such a technically

advanced project pays so little regard to those areas in which at least some measurement could take place. It is the argument of so many technologists that they are all the time improving our capacity to measure. This is the great argument of the computer school. Yet here, as the answers to Questions Nos. 940–1 clearly show, there was hardly any conventional market research done to determine what might be the demand for this type of aircraft. I regard this as a thoroughly unsatisfactory state of affairs.
Moreover, it is quite clear that, even now—the hon. Member for Bebington made this point—we know very little about the implications of the sonic boom so far as it might affect the market for the stretched version. We cannot go on taking on trust that all this is bearable because of the technological fall-out. This is the sort of blackmail argument against which the layman should sternly set his face. Ought it not to be within the scope of our technologists with their supposed superior skills in measurement to give us some quantification of the technological advantages which we shall acquire from the development of this aircraft? There must be an attempt to give us some idea of what goes into the scale to offset the escalating costs about which we already know only too much.
The whole cost escalation of the Concord is a Treasury nightmare. It must have been a nightmare not to have a break clause in the original contract. It must be still, now that we learn, as the Treasury tells us on page 3 of its Minute, that
both Governments are examining jointly and with their contractors the possibilities of, and the considerable problems involved in, defining consistent and acceptable incentive schemes.
We are not here dealing with a modest project of a few million £s. If we were, I believe that this would be a major and continuing source of public and political argument and controversy. In fact, it is a subject of so many hundreds of millions of £s that it is easier to shut one's eyes to it and to try to forget all about it.
We are still talking about establishing incentive schemes. Surely we ought now to hope that some kind of discipline is being introduced into the financing of this project. These are hundreds of millions of £s, and surely the project is capable of


some discipline as a result of some kind of incentive schemes. I hope that we shall hear of rather more dramatic progress to this end than we have heard hitherto.
May I refer to the point about cost sharing mentioned by my hon. Friend the Member for Kingston-upon-Thames. The Treasury and Ministry of Aviation, says the Treasury Minute,
appreciate the importance which attaches to a review of the cost-sharing arrangements for Concord but consider it premature to proceed with this review without further experience of the arrangements in operation.
I am not sure why it is premature. If it means that the costs have to go some way further yet before this final step is taken, I hope that we shall have some assurance on the point.
Undoubtedly we are seeing increasing signs that there will probably be schemes of Anglo-Continental character in all technology. Who knows, perhaps the giant computer, similar to the largest I.B.M. or C.D.C. models, may be the next project to be sponsored on a European scale. I do not know, but it is possible. We must try to ascertain the lessons of Concord before we find ourselves committed to these vast sums of money. My own feeling and prejudice is that it is desirable that these projects come under a uniform commercial management and that the sharing as between Governments and as between companies to try to obtain a fifty-fifty share on a Buggins turn system, is probably the worst of all worlds that we could have.
The development of the modern technologically based company operating on a European scale but registered in one of the constituent European countries is what we must seek to encourage and to welcome, and our procurement policies must be attached to a natural and evolved commercial structure. Beyond that I would not think it either prudent or possibly in order to go this afternoon.
I am quite sure that the mere incantation of the terms "technology" or "Europe" does not absolve the House or the Public Accounts Committee from a most rigorous and detached analysis of the control and use of public money, and to that end the Concord story can well be a salutary lesson.

5.14 p.m.

Mr. Michael Barnes: I should like to take up the question of the Concord, which has already been discussed by my hon. Friend the Member for Bebington (Mr. Brooks) and the hon. Member for Oswestry (Mr. Biffen). Many figures have been mentioned this afternoon in connection with the project. I should like to "recap" on the most important figures, which were mentioned by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) when he introduced the Report.
In November, 1962, the original agreement was signed between Britain and France and the development costs of Concord were then mentioned as being between£150 million and£170 million. By May, 1964, the development costs to the initial certificate of airworthiness had risen to£275 million. The reason given for this increase was very typical of the estimating throughout the project. Perhaps I may quote from paragraph 20 of the Second Report:
Later studies showed that the long-range version of the aircraft, in the form envisaged in the Agreement, would not be capable of operating the London or Paris to New York stages with the regularity and safety required by civil airlines and would therefore be useless for the long-range rôle; it was therefore decided to increase the basic thrust of the engines and the wing area.
One would have thought that this was such a basic consideration that it seems astonishing that it was not foreseen when the original estimating was done. Two years later in 1966 we are given the figure of£500 million.
The reason I want to raise the subject this afternoon is that the way in which the whole of the marketing of this project has been approached is very unsatisfactory, as the hon. Member for Oswestry said, and the discrepancies in the estimating are so enormous that the time has come for the ordinary people of this country, who are finding the money, to call a halt until they can be satisfied that there is no alternative to going on with the project. Any decision about ending the project would have to be a joint decision between ourselves and the French, and I can well see that with the Common Market negotiations now looming on the horizon, this would perhaps be a very difficult time to raise this matter


with the French. But even if it is impossible to back out of the project at this stage, at least the lessons of Concord must be learned.
I referred a few moments ago to the surprising and very basic reasons given for the first escalation in costs from £170 million to £275 million in 1964, and I should like to turn to the next escalation in costs from £275 million in 1964 to £500 million in 1966. This is made up apparently of, first, £95 million straight escalation. In discussing Concord one becomes involved in phrases such as "straightforward escalation" in costs of the size of £95 million to distinguish them from others which have been mentioned. Next, there is £80 million, which are development costs after the initial certificate of airworthiness, and then there is a further £50 million contingencies.
It appears from the Report that this £50 million is additional to any contingencies that were written into the first £275 million. May I refer hon. Members to Question 722 on page 89:
Do I take it, therefore, that the extra £50 million is an addition to an item which is already concealed, which we might call contingencies, distributed among the various heads?—In the original estimates, yes.
The next question and answer are:
So, 50 million is on the low side if we are to regard contingencies throughout the whole £500?—Yes, there is an allowance within the other figures, certainly.
There is a figure of £80 million as development costs after the initial certificate of airworthiness. It seems extraordinary that a sum of this magnitude should first be mentioned specifically at this stage in the project. Certainly Members of the Public Accounts Committee found this very strange. May I draw attention to Question 686 on page 86? The Question is:
What I am asking is why do you think this figure is one which it is right to introduce now, when some figure in respect of that was not introduced into the earlier calculations?—All I can say is this, that at the earlier period we were scoring up to that particular date.
A little later the answer continues, to Question 690:
Of course, I would agree that if at the time when the figure of 275 million was put forward it had been thought that a substantial element was going to be incurred afterwards, this should have been put in, but, of

course, we are talking here of things that are taking place a fairly long period ahead.
If estimating is done on that sort of basis, it is easy to see how the costs escalated. I have a lot of sympathy, reading the Report, with the question put by my hon. Friend the Member for Bebington:
Would it be fair to describe this figure of £500 million as a pure guess?
These are very large sums of money and have to be provided when the vast majority of our people are less well off in real terms than they were a year ago. It is remarkable that there has not been more of an outcry against this escalation. The reason is twofold. First, the calculations themselves are very complicated. Secondly, for reasons mentioned by the hon. Member for Oswestry, the higher the figure one is dealing with in estimates of this kind the easier it is to get the sum approved and the less fuss, very often, there is.
But there are simple principles which should be applied however complicated the estimating may be. One hopes that these principles will be brought home to our people so that, in future, Government Departments will think twice before embarking on projects in this way. It is easy to see how, in part, escalation has happened. Perhaps right hon. and hon. Gentleman opposite bear some responsibility for the way in which the cost and work sharing parts of the agreement were drawn up in 1962. An example is brought out on page 102. The answer to a question included the following passage:
In this development certain parts of the airframe are produced by B.A.C., certain parts of the airframe are produced by Sud-Aviation, certain parts of the engines are produced by Bristol-Siddeley, and certain parts of the engines by SNECMA".
One can well see, therefore, that if such decisions are to be taken on perhaps political grounds in this way rather than on engineering grounds it will lead to this sort of difficulty.
Then there is the question of whether the cost and work sharing cannot be reexamined. My hon. Friend the Member for Bebington referred to questions put by the Public Accounts Committee in 1964–65—for example, the request for a re-examination, which was refused and is still being refused. But even if this project is finally a success in the engineering sense, we are certainly not going to be


able to recoup much of the developing costs because the forecast price is not apparently related to the esclating development costs anyway. When this was pointed out in the Committee, the reply was:
These are in a different field of figuring altogether.
But as the Concord story unfolds one cannot help thinking that it is typical of one of the worst aspects of British industry—that a project so often tends to be production orientated and production dominated with very little attention being paid to the marketing implications and consumer considerations of what is being done. An example of this is the question of the sonic boom and toleration levels, again referred to by my hon. Friend the Member for Bebington.
My hon. Friend has reminded us of how the Public Accounts Committee in February 1965 was told that it would be possible perhaps to give a clearer idea within two years of what the position would be, but when he put the same question this year he was told that it would be a long time before it was possible to say more about it. This is astonishing, because it is such a basic and important consideration, and certainly in London at the moment there is a rising protest by residents about the whole question of aircraft noise. We are told that the Concord, if it should fly at supersonic speeds over land, will leave a boom carpet between 20 and 40 miles wide. Anyone who lives in the region of London Airport will shudder at the thought of what noise the Concord is likely to make in landing and taking off.
One may ask, "What is all this for?" It is for a reduction, say, of the flying time between London and New York by about half—from seven hours down to about three and a half. But who is the advance to be made for? Not, in the short-term, for the ordinary man in the street or his family, people who want cheapness and safety above all in air travel, especially when it can take them to far and exciting parts of the world for their holidays. Those who will be flying in the Concord at first will be the international jet set, who are playing the power game with other people's money—politicians, businessmen and diplomats who do not buy their own tickets with their own money but simply order their clerks or

secretaries to pick up the telephone and arrange for the tickets.

Mr. Anthony Royle: Surely the hon. Gentleman misses the point. The idea is that Concord could be used far more often for Atlantic crossings. By making better use of the time the aircraft is in the air, the airlines could be more profitable because the speed of turn-round would make the Concord more profitable than slower aircraft.

Mr. Barnes: It is equally true that, as the development costs go up, the airlines will have to pay a higher price. That is referred to in the Report. Although it is made clear that there is no direct connection between the price the airlines will have to pay and the escalating development costs, it is also made clear that the price originally mentioned when the first options were taken out is no longer valid. It was not valid in 1965 and it certainly is not valid now. Any return of the sort mentioned by the hon. Gentleman would be offset by the increased price in the early stages which the airline will have to pay.

Mr. Biffen: Does not the hon. Gentleman also agree that there are few signs that pressure from the airlines has led to the development of the supersonic airliner? Does not he agree that, on the contrary, the airlines would rather have had a longer time to amortise their latest generation of jet fleets?

Mr. Barnes: I agree with the hon. Gentleman. That is certainly so. I make one final point—the question of technological fallout. When one puts forward this sort of argument against the Concord, one tends to get the reply, "But one of the main benefits for British industry is the accompanying technological fall-out". That may be all right in principle, but research and development into a project, including even the Concord, must have some limit. It cannot be entirely open-ended. At the moment it seems to be an open-ended figure, because the figure of £500 million which has been mentioned seems to be a "flexible ceiling", to use the words used in the Report.
The future of this country depends on the efficient use of our resources of manpower, money and skill. Over the last


20 years or so, we have squandered a suicidal proportion of our resources on illusory prestige projects of one kind or another. Nothing has convinced me that Concord is not just another of these.

5.30 p.m.

Sir Douglas Glover: I apologise to the House for not having been here for the whole of the debate so far, but I have only just come back from the United States of America. I hope to be able to tell the House what I have been able to pick up in the United States of the view there of whether Concord is a viable project. In the United States there is now a great controversy between Lockheed and Boeing, and the Concord is the third of the three supersonic aircraft.
Before coming to that, I want to say as a member of the Public Accounts Committee that I view with considerable alarm, as does everyone who has spoken so far, I gather, the escalating cost of this aircraft, which was originally to be about £80 million or £90 million and which has now reached £420 million. I say £420 million, because I do not think that it is right——

Mr. Rankin: Mr. Rankin rose——

Sir D. Glover: I have only just started. I will give way later on when I have got into my theme, but at the moment I do not have a theme. I am in a vacuum like a supersonic aircraft going across the Atlantic. I hope that the hon. Member will allow me time to unfasten my seat belt.
The whole record of research and development in this country requires severe scrutiny. I do not know of a single project of this kind since the war—and that includes periods for which both parties have been responsible—for which the original estimate has not been minute compared with the eventual cost. I speak as a very simple man who is not a technologist, or an accountant, or an economist, but I do not understand why, after 20 years of history when the estimate for every development project has been exceeded by about five to one, our advisers and experts do not say when a new project comes along, "History shows that these estimates are always up the pole and we will therefore produce an

estimate which is at least two or three times bigger than we expect at the moment".
I wonder how many projects which have been undertaken would have been carried out if the House of Commons had been told in the initial stage what the cost was to be. The cost of Concord was supposed to be £80 million, but it has risen to £170 million, £275 million or £420 million, so that our experts always seem to be leading us on step by step but never a step being so big as to persuade the House to cancel the project. This seems to indicate that there is something seriously wrong in the pre-planning of these projects and in estimating how much the cost of research and development is likely to rise, and that situation is exemplified by the Concord project.
I said that the cost was to be £420 million and not £500 million, because the former figure is to make the first viable aircraft. The £80 million is to be added on for contingencies and improvements. As every successful aircraft probably has its range extended and probably almost doubled and its seating capacity, if it is a civil airliner, increased by 50 per cent. before it finishes its serviceable life, it seems to be wrong to add in those costs when assessing the costs of producing the Concord. It is forgotten now that the original D.C.3 eventually became the D.C.7, starting as a short-haul aircraft and finishing up as an aircraft which could fly the Atlantic, although basically the same aircraft. Having said that, I am very critical of these costs and, as anyone who bothers to read the Blue Book from cover to cover will find, very critical of so many aspects of estimating by Government Departments for colonial loans and many other things.
However, having just returned from the United States, it appears to me that even on the present figure it is the view of many knowledgeable people in the United States that the Concord is a commercially viable aircraft. I am sorry not to agree with my hon. Friend the Member for Oswestry (Mr. Biffen), with whom I usually fundamentally agree, who said that a lot of money had been wasted on very advanced technological projects. Talk to any American, Mr. Deputy Speaker, and you will find that he is certain that the state of the American economy has been largely brought about


by the enormous fall-out of their advanced technological projects which have revolutionised the whole of the American economy. Things which would not have been dreamed of even 10 years ago are now standard operations, whether in the way a factory works or in the developments of miniaturisation of equipment and components in every kind of commercial activity, and it has all come from these very expensive technological projects.
We in this country would be making a very big mistake if, as probably the second most technologically advanced country, we opted out. Even though as a member of the Public Accounts Committee I am critical of these costs and think that far more realism should go into these projects before they are begun. I would like the House to know that so far as I have been able to gather, in the United States the Concord is regarded as having a viable economic commercial life.
This leaves out of account the question of the sonic boom. It seems odd to me that very advanced and "with-it" people seem to accept the development of projects like this without giving sufficient consideration to the sort of points which the hon. Member for Brentford and Chiswick (Mr. Barnes) made about unbearable noise. In the United States the view is taken that all the great transoceanic airlines will be very chary about taking too many Concords because of their mileage ceiling and that they are likely to wait for the Lockheed or Boeing which will do not 1,450 m.p.h. but 1,850 m.p.h., reducing the time for crossing the Atlantic from three hours to two. I am sure that the hon. Member for Brentford and Chiswick will appreciate what a saving that will be for all those pepole who do not pay for their own tickets when they send their secretaries to get them; but it may also reduce fares for him and me who have to cross on our own money.
But these faster planes are not being considered in the United States for future use on internal airlines, by the North Eastern, or American, or United. If the sonic boom is not too much for the American Continent, the Concord will be used because it will be perfectly viable for a 1,000-mile route whereas the faster

supersonic aircraft, the Lockheed and the Boeing, will not.
Even when the others are in operation, it is still thought that there will be a considerable market for the Concord. What we are arguing about today is the absurdity of nationalisation. This is not a question of a nation controlling an industry. The Concord is being produced by the French and the British. This is not nationalisation but internationalisation of companies. It is very doubtful whether any project of this sort will be produced in Europe in future by a national organisation. It will be produced by a consortium of European companies.
If this is so, I am sure that the most inefficient way of doing it is to take two entirely independent companies, one French and one British, or one Italian and one German, or one Italian and one British, and to tell them that between them they have to produce a particular piece of ironmongery. I am told that Alice in Wonderland is not fit for consumption by anyone under 21, but this is Alice in Wonderland material. Half of the trouble with the Concord is that it must be more expensive to produce an aircraft at two headquarters, separated by 600 miles, with two teams, speaking a different language, and both having to get into each other's minds.
No firm in Britain would even set out to do this if it was not Government money being used. This is the road to bankruptcy and no one else would even contemplate it. The only reason why it is done is because we feel that we cannot do it, the French feel that they cannot do it, and therefore national prestige is involved. Surely the right answer is that we should have a joint company, not a joint project?
The lesson of Concord is that the sooner we get into Europe and can form such a joint company to deal with such projects, the more likely is Europe to be able to produce something which is viable against American competition, economically sound and commercially efficient.
Every member of the Public Accounts Committee, listening to the evidence about the Concord project, could sense, running through all of the answers, the frustrations and difficulties encountered by the companies and by the Civil Service as a result of this joint project. Here we are committed not to an estimate.


There has been a meeting of the Ministers and it has been decided to proceed further with the project. This House no longer has to deal with an estimate, we are faced with a commitment. We are not now faced with another twelve months of development. Once the two Ministeries have met internationally then this House, whether it likes it or not, will have to vote money, because we are committed.
If that means that we vote another £200 million, that is not an estimate of the expenditure. We have committed ourselves to that expenditure. This House has lost control of the project and this is bound to happen with these joint national projects. Therefore, the House had better realise, if we are to have any more of these joint ventures, that we are not dealing with estimates, but with firm commitments entered into, long before the money has been spent and long before we can stop it being spent.
There can be no change of view when it is an agreement between Governments. Yet, at the same time, we are now committed to producing an aircraft which I still believe will be viable, despite the increases in its cost. However, it will now be only just viable, and we still do not know whether the figure is realistic or whether it is still an estimate. We still do not know what the French are thinking about this because we only hear half of the story. We do not know whether the French are enthusiastic or are dragging their feet.
We do not know whether we are pushing the French up to the fence to sign the agreement or they are pushing us. We do not know whether there is enthusiasm on both sides or a dragging of feet on both sides. We do not know whether either side is enthusiastic, and this is inevitable when one deals between two Governments. It will not be easy, but we now have to begin to evolve jointly-controlled companies which will deal with these large international development projects. The present system of an ad hoc arrangement, whereby one takes a French company and a British company and asks them to produce something, is not the way to produce anything efficient.
We are entering the international world and the sooner those people who make the mistakes about these estimates put on their other hats—when they do not

make mistakes and produce agreements—the sooner they spend more time working out how future projects can be carried out with far greater control and co-ordination between the two companies—because these companies will probably be linked by financial control—the sooner Europe will begin to compete with the American aircraft industry on a far more realistic basis.

5.46 p.m.

Mr. Gerry Fowler: I do not want to talk much about Concord, but before I turn to my main subject I would like to say a word about it. I cannot agree with the hon. Member for Ormskirk (Sir D. Glover) that what we are really debating is nationalisation. The crucial point was that made by my hon. Friend the Member for Brentford and Chiswick (Mr. Barnes), when he referred to the danger of British industry paying too little attention to the marketing of products in comparison with the production side of industry. I made a speech in this House a month ago largely on this subject.
There is a very real danger, in the public sector particularly, that we pay too little attention to marketing. It is much easier in this sector to neglect the consumption aspect of industrial production. Perhaps there has now come a time when we should mount a campaign to make people, not only in the public sector of industry, but those who are concerned with the expenditure of public money in private industry, more aware of the need to look at the marketing aspects of production.
My main subject deals with Paragraphs 70 to 78, and paragraph 3, that is, the problem of the accountability of universities for the expenditure of public money. I understand perfectly well why it was that the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was unwilling to say much about this since the Committee is investigating this matter. The Committee might find it helpful if some of us said a little about this.
I was delighted to hear the remarks of the hon. Gentleman the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), particularly on the subject of academic freedom. I speak as an ex-academic. There is a great deal of nonsense talked in the universities about


academic freedom. I was in a university recently—a week ago—and already rumours were circulating that we might be attempting, in Parliament, to secure a greater measure of accountability from the universities for the expenditure of public money. There were mutters of discontent about Parliament considering interfering with academic freedom.
This is the most arrant nonsense. There is a very sharp distinction to be drawn between the essence of academic freedom, which is the right to teach what one will in the way that one will, and linked with this, as the hon. Gentleman the Member for Walsall, South, said, the right of the universities to make their own appointments—with which no one would wish to interfere—and the right of the universities to spend the taxpayers' money, without any acountability to Parliament. It is far from its being the case that there is in the House a desire to interfere with academic freedom. What is wrong is that there is perhaps too little awareness in some universities that they are dealing with taxpayers' money and should ultimately account to the taxpayer through Parliament for the way in which that money is spent.
The U.G.C. system of handing out money to the universities has, I think, worked quite well in general. There are, however, criticisms to be made of it which go both ways. When I was looking at this question from the other side of the fence as a member of the senate of one of the new universities, I used to feel, and I think I still feel, that the U.G.C. system of costing in advance, particularly costing for residential accommodation in the universities, is too tight and that it restricts unnecessarily experiment in the development of new types of residential structure for universities.
On the other hand, many of us felt that the U.G.C. visit to universities before the regular quinquennial review was, in some measure, a waste of time. It was almost like the visit of the general officer commanding to an Army barracks—when the grass is cleaned. Similarly, the universities are polished up for the U.G.C. visit. The whole day is spent in endless discussion with a whole series of bodies, with many people turning up two or three times on different committees to talk to the U.G.C., and no discussion is long enough for the ice to be cracked.
It is time that we had another look at the U.G.C. system of giving public money to the universities. The crucial point is that we should consider whether we want accountability to the Comptroller and Auditor General and the P.A.C. as well as to the U.G.C., and whether we want universities and colleges to present their accounts in a uniform way.
Another matter which I hope the P.A.C. will look at is the question of moneys other than those derived from the U.G.C. Universities handle other moneys and some of them are public. Some of them come in the shape of fees or dues from the grants paid by the local education authorities or the Department or by other public bodies to students. There are private moneys, too, which affect the question of how much public money is required by universities.
The problem can, perhaps, be most clearly seen in relation to the Oxbridge colleges. There is a long tradition of claiming that those colleges are quite independent and do not rely on public funds for their continued existence. Yet, in fact, perhaps half the salary of a fellow teaching at Oxford is derived from a lectureship, the money for which comes from the Common University Fund, largely supplied from U.G.C. sources, and, at the same time, the college relies very heavily on so-called tuition fees, so-called library dues, so-called college dues which are paid by the local education authority. These fees are, in general, calculated according to the needs of the college rather than according to the expenditure under one of these heads.
If it were not for these public moneys, such a college would have to rely much more heavily on its own endowment income to provide certain facilities in the college. The fact that it draws public money in this way means that it can spend some of that endowment income on what other universities might regard as frill projects or a bonus. I do not suggest for a moment that the Oxford or Cambridge colleges administer their funds badly or wastefully or that they waste public money. We do not know, because their accounts are not presented to the House and there is no uniform method of presenting the accounts to anybody.
I was delighted to see that the Franks Commission recommended in respect of Oxford that a new committee, called the College Accounts Committee, should be set up, one of whose duties would be to get the college to present its accounts in a uniform way so that there could be more public understanding of the sort for which the Robbins Report called of what was happening in that university. There should be not just public understanding but public accountability so that we in the House could understand why money is required for those universities as well as other universities, what it was required for and whether there was—I imagine that we all believe there is, but in fact we do not know—sensible control of the expenditure by each college of moneys derived from a variety of sources, some public and some private.
In the Franks Report, I was rather disturbed to see—I do not think that there was much Press comment on this—that, as a consequence of its admirable proposal for the equalisation of the endowment income of the Oxford Colleges, it suggested that if there was not enough money in central university funds to go round university dues should be increased to provide that money. It suggested, in fact, that the university should take a unilateral decision to milk the local education authorities for a little more money in order to provide endowment income for the colleges—in other words, to provide an income over the expenditure of which neither the House nor any other public body has any control. This seems to me very dangerous indeed. I am not at all sure that we do not need a system of public accountability which enabled the House to know exactly what was happening and why it was happening in those universities.
The P.A.C. might well consider this problem when it is looking at the whole question of university accountability, not least because if we again miss out the Oxbridge colleges and accept the argument that they are independent bodies we shall inevitably add to the store of resentment in some other institutions of higher learning—I have no axe to grind because I have been on both sides of this particular fence—that occasionally the Oxbridge colleges seem to be able to get away with murder. They get a regular

supply of public money in addition to their very large private endowment income.

Mr. Ronald Bell: I am surprised to hear the hon. Gentleman say that the colleges of Oxford and Cambridge receive public money. They receive dues paid by their undergraduate members for their being there. It may be that the money which those people pay is derived from a local education authority, but that has nothing to do with the college, which is merely dealing with its undergraduate members who pay the appropriate fees or dues for being there. Those young men might equally be there with their parents paying the fees. The fact that, as it happens, some undergraduate members are deriving money from local education authorities cannot raise any question of public accountability on the part of the colleges.

Mr. Fowler: I am talking about fact and not theory. It could theoretically be the case that most of this money came from parents' pockets. In fact, virtually none of it does; it is paid directly to the colleges by the local education authorities. But that is not the only source of public money to which I was referring. I pointed out very carefully that in 90 per cent. of the cases half or perhaps, in some instances, more of the salary of a fellow of an Oxford college is derived from the university appointment which is directly consequent on that fellowship and is paid from public funds. I pointed out, further, that there is a proposal that many of the colleges, in Oxford at least, should be subsidised from a common university fund which, as the Franks Commission recommended, might derive a large part of its money from public sources. Indirect subsidy seems to me to be quite as important a matter of expenditure of public money as direct subsidy. I do not accept the argument that an indirect subsidy relieves the body which receives it of the need for accountability.
We have here a serious problem. I hope that we will look at the whole of it and not just part of it and that we will come out with a system whereby we have no interference with academic freedom but we have, at long last, a reasonable system of public accountability to this House by the universities for the expenditure of public money.

6.1 p.m.

Mr. John Rankin: I have listened with great interest to the debate and I have heard every speech which has been made. Although I disagree with many of them, I think that all of them made fairly stated cases. As I indicated in an intervention, I have discussed with my hon. Friend the Member for Bebington (Mr. Brooks) some of the points which he has made today.
There are two radically different points of view in the debate. There is my point of view and there are the other points of view. That is not stated in any cock-sure attitude. It is merely a simple fact.

Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Member must address the Chair.

Mr. Rankin: I apologise, Mr. Deputy Speaker. One can circulate information but one must not circulate oneself.
There are two points of view. I happened to be one of the comparatively small band of Members, on both sides of the House, who in 1962 had to look forward. Today, I have listened to those who have prepared the Report of the Committee, which is of immense interest, and who are looking backward. That is the easier job of the two; hindsight is easier than foresight.
In 1962, on 21st December, just about a month after the conclusion of the agreement between France and ourselves, I raised the matter of the supersonic air-liner on the Floor of the House. The debate on that occasion was a fullscale debate. It went on the whole day and many hon. Members on both sides who wanted to contribute were not able to speak.
I should like to quote one or two extracts of my speech on that occasion. This is what I said:
The decision to build a supersonic airliner has been welcomed on this side of the House.
I want to make it perfectly clear that on that day I was occupying the opposite seat in the House to that which I occupy now, in the corresponding corner of the Front Bench below the Gangway, but that the fact that I was then on the Opposition side did not make any difference to my view. I think that I was speaking for most of my colleagues—and there were many of them—because none

dissented when I said that we welcomed that decision.
I went on to say:
but that does not mean that we are satisfied with the rather scanty information provided by the right hon. Gentleman the Minister when he announced, a short time ago, that the construction of the prototype was to be proceeded with.
Therefore, if hon. Members today are dissatisfied with the amount of information which is available, they should remember that from the very beginning, when the Conservative Government intimated that they were going ahead with this aircraft, we registered our dissatisfaction about the scantiness of the information that they were giving us. That lack of information was, perhaps, due to the fact that the Government of the day recognised this as a vast experiment and something which in all probability, as the days and years passed, would develop beyond any conception which they might have had at the point of departure. The information may not have been available because the Government of that day recognised that the project was an experiment.
I continued:
For many months Members of the Opposition have urged the Minister to commit himself to this project.
Therefore, we were already, at least in individual effort, behind the Government in urging them to go ahead.
To continue the quotation:
Now that the decision has been finally taken we feel that too much valuable time was lost.
It may well be that the loss of that time is being paid for now. That, however, is the sort of question to which, like so many other questions, there can be no valid answer at this stage.
I went on to say in December 1962:
If this view be wrong, it is the Parliamentary Secretary's bounden duty at this stage to show me today why and where I am wrong.
I am sure that it is for the most valid of reasons that the hon. Member for Banbury (Mr. Marten), who was then Parliamentary Secretary, is not able to be with us today, for I think that his speech in a debate of this nature would have been of immense value to both sides of the House.
I then posed a question as to the purpose of air travel and why we travelled


by air. Fifteen years earlier I had tried to find an answer to that question. In 1962, I quoted what I had said fifteen years before when I raised the question of air travel, air speed and all the things that cluster around those aspects of travel.
In 1947 we were coming out of the period when we had been flying reconditioned aircraft that were used during the war and which subsequently were converted to civilian use. Therefore, the question was before us of research into the type of aircraft which had to dominate the years of peace.
I asked, in December, 1962,
In that case, why should we not turn our research towards the design of an aircraft which is planned not merely for speed, but for comfort and safety in travel; and able to be operated at low and stable fares, with low landing speed and light wing loading?"—[OFFICIAL REPORT, 21st December, 1962; Vol. 669, c. 1627, 1632.]
That was what I asked for again, in a House that was very full for a Friday, and when I was sitting on the other side.
I did not get it, and we are paying for that today. It may, of course, have been absurd to have talked about limiting the speed and thereby limiting the development of aircraft, because at the same time as I was arguing that our manufacturers were producing military aircraft which were moving faster and faster and finally reached supersonic speed, and whether we like it or not, it was almost impossible for designers, because of investment costs, to separate military and civil design, to have different staffs and different technical experts, and so on; the two were linked together.
So we went on from the 90 m.p.h. of the Rapides to the 200 m.p.h. of the Dakotas up to the Viscounts and on to the 400 m.p.h. of the Vanguard and now the 610 m.p.h. of the Trident. We rejected the idea of stabilising speed and concentrating on other characteristics. That was done by both sides.
Now today we have an important Committee which looks backward to all this and tells us what should have been done and what ought not to have been done. I have spent eight years in one of these Committees of the House and I know the type of dedicated work which goes into them and the time that is spent on these investigations; but how helpful they

are now, when the money has been spent, is another matter altogether.
Cost, of course, is reaching proportions which, naturally, cause us to pause and think. But we have, I think, got to put the cost into what we may call the financial background. When we are talking about the expenditure on this particular plane let us remember that in 1962 we had a gross national product of £25,000 million. That was in 1962. In 1964 that had risen to £29,000 million and I think there is no doubt that by the end of this financial year it will be in the region of £33,000 million. On our gross national product Government demands have risen correspondingly, from £6,000 million to what I believe by the end of this financial year will be some £8,000 million.
So that figure which we spoke about in 1962, £75 million, related to the figure we are talking about today, bears a reasonable relationship to the change in the national income. Costs have gone up; so has our national income. National income goes up in a manner similar to the increase in the price of this commodity. Because costs go up, we get a higher national income.
In 1962 we ventured a thought about costs. I said:
The bulk of the cost of the development must be borne by the taxpayer and his liability in Britain will be not less than £75 million.
That was generally accepted, though I am not sure that I can commit the Minister of that period to the figure which I had been guided to accept. But I went a little further and I said:
The figure I gave represents the minimum amount of money which will need to be invested, but it is already being suggested that we will require to think of another 25 per cent. beyond that minimum for what are being called contingencies.'
I ventured this further observation:
When one looks into the matter one realises that even this additional percentage may be insufficient."—[OFFICIAL REPORT, 21st December, 1962; Vol. 669, c. 1628.]

Mr. Brooks: May I ask my hon. Friend two points on this very interesting relationship between the gross national product and the cost of the Concord scheme? The first point is, did I understand him to say that the gross national product in 1962 was £25,000 million and


two years later was £29,000 million, because this seems to me to be a rate of increase of some 8 per cent. a year in two years and I am wondering if he thinks it is the sort of rate of development which took place in that period?

Mr. Ronald Bell: There was a Conservative Government.

Mr. Brooks: The second point is that the development cost of Concord has gone up three times in the last three and a half years. It surely is far greater than that rate?

Mr. Rankin: I am sorry if I have misled my hon. Friend. What I was trying to establish was that there was this growth in the national income which, to some extent, was not keeping pace, but was part and parcel of the growth which was taking place—not to the same extent, of course—in the cost of the Concord.
I am not taking any defensive attitude in pointing to these facts, but those of us who tried to envision this particular project and its possibilities and what it would mean to us as a nation did try to peer into the future and to make attempts at assessing the costs and I think the House ought to be reminded of these things.
As I said, our job was much more difficult than was the job of the Public Accounts Committee. I pay tribute to the Committee for the work it has done. Indeed I do. Nevertheless it is always, as I said, a much easier matter to look back on what has been done than it is to look forward—into what was a blank space. There has been a tremendous jump forward. It was not like that from 1947 to 1962 which kept us still at sonic speed. It was a jump that took us from sonic into supersonic speed, into a new atmosphere altogether and a new environment. Consequently, if the cost which faces us comes somewhat alarmingly before us, we have to realise that we have put our hands to this effort—I cannot say "to this plough", although it may plough the skies. With it is joined the good will of two nations.
I am sorry that the hon. Member for Ormskirk (Sir D. Glover) is not in his place, because I should like to join issue with him about the difficulties which he alleged exist between British and French technicians, designers and aircraft workers

on this project. The manner in which this joint venture is proceeding at floor level, in the offices and at board level, is remarkable. There is wonderful good feeling and co-operation. Even the difference in languages is no barrier to the progress which the project is making. I am certain that from this House tonight no single word will go forth from either Front Bench that would tend to discourage either our French friends, who are doing their bit, and our own people, who have been working well at home.

6.22 p.m.

Mr. Ronald Bell: The purpose of this debate is to discuss not so much the Concord or any other particular aeroplane in its own right, but the control of public expenditure in respect of some of these projects. I do not intend to say anything about the merits of an aeroplane such as that, because I do not feel qualified to do so.
Before turning to the control of university expenditure, which is what I caught your eye to speak about, Mr. Deputy Speaker, I wish to make the comment that the speech of the hon. Member for Glasgow, Govan (Mr. Rankin) has tended to show me, at any rate, how dangerous public control of technical development can be. If I understood his quotation within a quotation correctly, in 1947 he was trying to limit the speed of aeroplanes, approximately, I assume, to the levels then existing. I must say that I think that an extremely unwise thing to do. If the Parliamentary control of public expenditure were ever to be used for purposes like seeking to circumscribe scientific development according to lines of policy laid down by reference to public expenditure, the result of such control could only be to the disadvantage of the human race.

Mr. Rankin: The hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) is taking what I said too far. I thought that I had made it clear that I wanted to see built into aircraft the characteristics of safety, cheap fares and other features first. Speed would have been controlled and would not have grown so quickly, but it was bound to grow.

Mr. Bell: That is only a difference in degree from what I am saying. Broadly speaking, what the hon. Gentleman was saying was that the system of public


accountability for development to which the State was a financial contributor should be subject to considerations like this where the growth of speed, if not stopped, would be greatly limited by Parliamentary control. That is a thoroughly bad thing, and I do not think that Parliament is fit to impose such guidelines on the development of natural science or the applications of it.
That leads me to the point which I wanted to make, which was about the control of university expenditure. It was referred to by the hon. Member for The Wrekin (Mr. Fowler) in his speech.
The argument between the Public Accounts Committee and the University Grants Committee is an old one. It arises with considerable frequency, though not every year, and usually The Times writes an angry leading article beating down the arrogance of the Public Accounts Committee and supporting the cause of academic freedom.
I dare say that there is something to be said on both sides. Obviously, the fish which the Public Accounts Committee caught and referred to in its Second Report was one which supports its case for public accountability. It caught a loan of£1 million from public funds to the University of London which had simply been lost sight of. All of us as individuals must have a feeling of envy that someone can be lent £1 million and have the lender forget about it. It is not the kind of thing which happens to us in our lives.
It is the result of an obvious breakdown in the Parliamentary control of public expenditure. Unfortunately, the episode takes its place in a rather long perspective—in a battle array—and the hon. Member for The Wrekin carried the implication a good deal further than just looking after loans of public money when they have been made. He pressed, in particular, for the accountability to go back to the Oxford and Cambridge colleges.
I should like to take up that point, narrow though it is, because it illustrates the danger of this argument. The Oxford and Cambridge colleges do not receive public funds. Very largely, the money helps to support the universities of which they are the component parts, and one of

the main glories of the Oxford and Cambridge system has been the clear distinction established between the universities and the colleges.
Many of those who have been to either of the two universities feel that the university should be firmly and properly kept in its place. There is much danger in the university growing too powerful in relation to the colleges which the public grants system tends to bring about and which the public accountability system emphasises still further, because it leads to standardisation.
The hon. Gentleman wanted to make the colleges accountable to the Public Accounts Committee, and he said that that could be done without encroaching upon academic freedom. I have grave doubts whether even making the University Grants Committee accountable to the Public Accounts Committee to the extent that it is now is really compatible with academic freedom. Over the past years, we have seen a long drawn out battle between the Public Accounts Committee and the University Grants Committee, of which this Second Report is only the latest episode.
One cannot get away from the fact that if people are to be made to account precisely, academic freedom becomes illusory, because people will say, "You have had public money. You must use it for purposes which carry forward public policy as expressed in the Parliament of the day." That is a very dangerous doctrine. If we carry it one stage further and make the component parts of universities separately accountable, will the result be academic freedom or uniformity? One set of criteria will be applied to the policy of each college, and they will all be made to justify it. There is, unhappily, in our days only one set of fashionable values, and unless people relate their activities to the fashionable values, it will be said, not that they are wasting the money, but that they are not applying it to the best advantage.

Mr. Fowler: Can the hon. Gentleman clarify one point of fact? He said that the colleges support the university. How can he justify that in 1966, as opposed to 1866? So far as I know, that is untrue.

Mr. Bell: It is true because the colleges pay capitation fees to the university. Out


of their endowments, they pay a contribution, which used to be proportionate to the size of the endowment, to the central fund of the university which, until 1939—and it may have been later—was dependent on them for it. I was not at Oxford in 1866, even though I may look as though I was. The colleges have always been self-supporting and have largely supported the university, though I know that public funds have taken over the major rôle.
I think that there is a great danger here. The House is properly jealous of the use of public money, and realises that some academic accounting procedures have been enthusiastic, I think is the right word. After all, it will be remembered that a few years ago we considered that the accounting in relation to the Jodrell Bank telescope was a little odd, but the enthusiasm was undoubted, and the product was eventually highly praised.
I beg the hon. Member for The Wrekin to reconsider his attitude in this matter, whether it is really worth nagging at these bodies because they are independent, because they are not answerable to the State, and trying to take something away from them, to take away a difference. The hon. Gentleman said that there was considerable resentment at the fact that the colleges might be getting away with something. Getting away with what? As they do not receive any direct public subvention, that is not involved. If they did not take undergraduates who were receiving local education authority grants, they would have no difficulty in filling the colleges with those who were not.
I repeat my question, getting away with what? The answer must be getting away with spending money at their disposal—college dues and so on—in the way that they think most appropriate to carry forward a variegated university life. What is the resentment? I am afraid that it can only be a somewhat envious resentment by those who are under close discipline from the U.G.C., under pressure by the P.A.C., and they look enviously at those who do not have to work under such pressures.
The lesson which that leaves in my mind is that perhaps we ought to give to the others what they so much envy in the Oxford and Cambridge colleges, namely, a feeling that somebody is not

looking over their shoulders all the time trying to apply the pattern of public policy to all their visions and aspirations. I am an unrepentant believer in a wide degree of academic freedom. If, occasionally, the result of that is that some money slips through the net, I think that it is a price which is well paid, and which this country ought to afford to pay.

6.36 p.m.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): It is a pleasure to join the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and others in congratulating the Exchequer and Audit Department on celebrating its centenary this year. There is no doubt that this Department has become a familiar part of the Whitehall scene, and it would be hard to picture now how the Whitehall machine would function without it.
There may be times when Departments feel a little irked at some of its activities, but I think that these are rare feelings. Perhaps, occasionally, when the Department unearths some misapplication of funds which a Department has discovered for itself, we try to comfort it from the Treasury by pointing out that it is better that the Department concerned should have unearthed something, rather than that the Treasury had not found it.
The people concerned are highly respected. They take a great professional pride in their work, and justifiably, perhaps, the greatest tribute is that so many other countries have followed our example in setting up a body of this kind. Our Department has helped to train many Exchequer and Audit Departments overseas.
This year of centenary also marks the retirement as Comptroller and Auditor General of Sir Edmund Compton, and gracious tributes have rightly been paid to him. Fortunately, the House of Commons is not to lose him, as he is to be the first of the Parliamentary Commissioners when the legislation now before the House goes through, as I think one can confidently predict it will.
As the Minister in charge of that Bill, I am perhaps in a better position than most already to express an opinion about how much the House will benefit from his wisdom and skill in that office, and of course reference has been made during


our debates on that Bill to the fact that the scheme for the Parliamentary Commissioner and his relationship with this House has been closely modelled on the relationship between the Comptroller and Auditor General, the Public Accounts Committee, and the House, and we have gained greatly from this experience.
It is also proper for us on this occasion to welcome the appointment of Sir Bruce Fraser as Sir Edmund's successor. I am certain that anyone who has worked with Sir Bruce will have not the slightest doubt that he has all the qualities of fairness and independence of mind which will go to make him a worthy successor to Sir Edmund.
I should also like, on behalf of the Treasury Officer of Accounts, who cannot speak for himself, to thank hon. Members for the kind words they have said about him.
The functions of the P.A.C. are to see that moneys paid by Parliament are properly applied in accordance with financial propriety, and also that there is effective financial control to ensure that the public gets the best value for money for those funds. It is in accordance with the current shift that of the 16 main topics dealt with in this year's Report by the Committee, ten are primarily concerned with the question of value for money, three exclusively with questions of propriety, and three are mixed.
Perhaps I might select for comment those matters on which I intend to try to reply briefly in the order in which they appear in the Report, and begin with the questions of overseas aid which were dealt with by the right hon. Gentleman the Chairman of the Committee.
There are two points here. First, there is the question of shortcomings in the financial control and accounting of overseas aid, in particular with reference to the problems which have been experienced in Kenya. The Treasury Minute makes it clear that we are at one with the Committee in regarding proper financial control by the recipient countries as a matter of fundamental importance to the aid programmes. This is being made clear on all appropriate occasions to the countries concerned, and also, where appropriate—and again this is in line with the recommendations of

the Committee—we are seeking to replace the deficiency grant by the block grant system.
Regarding the Kenya case, there is little that I need add to what is in the Treasury Minute, other than to point out that a lot of the accounting difficulties in this case arose in connection with the agricultural settlement schemes. It is only fair to Kenya to remember that something approaching an agricultural revolution has been carried out with little if any public disturbance and under great pressure of time. It is perhaps not a little surprising if, under those circumstances, the complicated accounting systems which were introduced to deal with the situation proved to be beyond the capacity of the available staff. In any event, the staff has now been strengthened and a special adviser has been appointed to advise on settlement accounting systems generally.
The second point to which the right hon. Gentleman referred dealt with the question which the Committee examined further, of the over-issues to territories which have become independent, with particular reference to Sierra Leone. This is a matter which had been considered before. The Committee expressed concern that the matter had not been dealt with more expeditiously. I think that the Accounting Officer confessed to standing in something of a white sheet over this matter. The accountant to the Ministry of Overseas Development visited Sierra Leone in May of this year and, as the Treasury Minute shows, the amount outstanding has been reduced to £417,000.
The Ministry is discussing with the Treasury the terms on which Sierra Leone may be asked to repay this money. An approach may be made to the Government and we hope to have the matter concluded by the end of this year or very early next year. Naturally, our consideration of this date has, to some extent, been overshadowed by the emergence of a serious financial position in Sierra Leone which has led them to call in the International Monetary Fund. We shall obviously have to take account of this in considering how to recover the amount over-issued.
These issues, although they add up to quite a large sum in the aggregate, tend


to be relatively small amounts individually, covering quite a large number of territories. The Ministry of Overseas Development, however, is determined to ensure that, as far as possible, these audited statements are received at the proper time, and the delays which have been involved here will not be repeated.
I turn now to those matters which have been the main subject of debate today, namely, those concerning the Ministry of Aviation. Before I do so, I should like to mention something that I overlooked in my preliminary remarks, which is to thank the right hon. Gentleman for the remarks he made about the publication of the Treasury Minute as a White Paper. I am sure the House will agree with the right hon. Gentleman in thinking that this is a convenient procedure, and, if this is the wish of the House, we shall be very glad to make it a regular practice. I think it saves time, and we are grateful to the Committee for its suggestion.
The main subject of debate has been the question of the escalation of costs of these aviation development projects, in particular those related to Concord and the TSR2. Rather more has been said today about Concord than about the TSR2, though some similar problems arise with both.
First, the Concord project was wholly unparalleled both in scale and in complexity, because of the technical problems involved in production of the aircraft, and because it was an international project. It is fair to say that the starting point of the failure to obtain effective control over commitments and expenditure was really the nature of the original Anglo-French Treaty on this matter, which was an open-ended Treaty. It contained only a very vague definition of the aircraft to which it related. As was commented by one hon. Member, and as is well known, there are no break clauses in it. It did not provide for any step-by-step commitment. There was one irrevocable commitment running right through to production with this ill-defined project.
Secondly, the two Governments concerned entered into this Treaty before the firms concerned, which were to produce the aircraft, had really been effectively tied in. Some very wide questions have been raised during the debate, on which

I do not think it would be useful or proper for me to comment—questions like the sonic boom, the suggestion that it would be preferable if we had a joint Anglo-European corporation dealing with projects of this kind, and so on.
The issue with which we are concerned today is, of course, the machinery for the control of public expenditure. The Committee, in its Report, has emphasised again the need for effective control on projects of this kind, and commented that the arrangements in hand should be continuously reviewed. The Treasury Minute endorses this comment.
It is right to remember that the Concord project, although a civil project, is subject to the full control machinery which is associated with military projects. Although French methods differ, the French have been equally concerned with us to try to establish proper control machinery. Development costs plans have been submitted by the major contractors in both Britain and France. In order to strengthen the Ministry's management, a separate division has been set up within the Ministry of Aviation combining the administration, the financial and technical functions in reporting to a single head—the Director-General of the Concord programme, whose appointment was recently announced by the Minister of Aviation.
It is recognised that detailed control of expenditure must remain the responsibility of industry, and firms are being encouraged to use the best methods. This is a contractual requirement. A major Anglo-French review was carried out at the beginning of this year. It is indicated that the methods used were an improvement on past practice. Difficulties arose, mainly over this matter of methods, and the operation of these methods is being kept under close review.
It is right and important to distinguish between the increase in the total estimated cost, which is due to previous under-estimation, and faulty cost control. Estimates deal essentially with the likely future expenditure, and it does not follow that rising estimates imply faulty control of present expenditure. The Committee has returned to its recommendation that a thorough study should be carried out as soon as possible on the sharing of work and expenditure by the


French and United Kingdom Governments under the work-sharing agreement. The Treasury Minute, in reply, says that the matter of this review is appreciated, but that it is:
premature to proceed to this review without further experience of the arrangements in operation.
A number of hon. Members have asked me to comment further on this, and to say why we consider this to be premature, and to indicate when we think is the right time. The main division of work under this agreement was, of course, decided on at the outset in the Treaty. Sud-Aviation was to have 60 per cent. of the airframe work and B.A.C. 40 per cent., and in respect of the engine Bristol-Siddeley was to have two-thirds and SNECMA was to have one-third.
The physical division of the tasks which make up these proportions is a very satisfactory one technically, and its overall result is expected to be approximately a 50–50 financial division. I do not think that the general division is called into question; what the Committee—both in its earlier Reports and again this year—is more particularly concerned with is the question of the sub-contracting of equipment. The position at the moment is that the placing of major sub-contracts requires the joint approval of both British and French officials, and the choices have in general been based on technical specification and tender estimates without seeking an exact 50–50 split. In the event the division of the work so far subcontracted is likely to be about equal, but since the equipment represents only one-tenth of the total development cost of a complete aircraft any inequalities would have only a marginal effect upon the total division of work.
I hope that this will help to dispel any idea that there might be that either technical specifications or tender estimates are being disregarded, or approached in an unnatural way, for the purpose of trying to achieve a 50–50 split. That is not the case.
Virtually all the sub-contracted work has been allocated, but it is the view of both the British and French authorities that until we are much nearer completion and actually have fully-equipped aircraft flying and have proved that they are satisfactory we will not be in a position to

judge whether or not the original decisions taken, on the whole, were good.
The prototype aircraft is due to make its first flight early in 1968. In our view it will be some time before we shall have reached the stage where it will be a useful exercise to try to review the system which has been adopted for work sharing, in order to see what defects it might have and in what way it can be improved upon in other projects.
Meanwhile, the progress on equipment development is constantly being watched by British and French officials, and if at any time they think that the wrong choice has been made they will not consider themselves bound to continue it.

Mr. Boyd-Carpenter: I made the point that this agreement might be regarded as a prototype for others. Does the hon. and learned Gentleman's indication that the Government are not proposing to have a review of the cost-sharing arrangement mean that they are also not going to make any similar provision in a future agreement until they have had this review?

Mr. MacDermot: The right hon. Gentleman knows that other projects are being discussed with the French Government for the joint production of aircraft, and in these cases they are not always, for other reasons, following the exact work-sharing arrangements which are contained in the Concord Treaty. It may be useful at a later stage to compare the arrangements under different schemes in order to see what are the advantages or disadvantages. We do not feel that for the purposes of considering those other projects, however, there will be any great additional experience than the experience already gained by those managing this project to be obtained by carrying out a review of this kind at present.
One of the chief subjects of comment in the debate has been the increase in the estimated cost of the project. The figure of the total present estimate for the development is £500 million, which was published by the Committee in its Report. My hon. Friend the Member for Bebington (Mr. Brooks) commented upon the fact that the Committee had disclosed this figure, and the right hon. Member for Kingston-upon-Thames referred to it in opening. The Accounting Officer properly asked that his evidence


on this point should be sidelined, but in my view the Committee was quite right to publish the figure. I am a member of the Committee, but a non-playing Member on most occasions, so I do not take part in votes of this kind. But if I had been present and had voted I would have voted for publication here. The Committee will always be very alive to the importance, whether on grounds of national security or commercial confidence, of not publishing matter which should not be published, but this was a question of obvious importance, and appart from anything else it might have caused even greater concern and alarm of the Committee had expressed its concern about the increase without saying what the increase was.

Mr. Boyd-Carpenter: Perhaps the hon. and learned Gentleman would make clear what he knows to be the fact, that although we did take the view that the figures must be published we were able to help the Government position with the French in respect of the timing of publication of the Report.

Mr. MacDermot: Yes. I am most grateful to the Committee for its cooperation in this matter. It would have been embarrassing if a matter like this had been disclosed without our officials being able to have an opportunity to discuss the matter first with our French allies. Owing to the co-operation of the Committee we were able to do that.
The figure of £500 million is not a true comparison with the last estimate given publicly, namely, £275 million, in May, 1964. This is made clear by implication in the Report, and although it does not, in terms, state the exact comparison figures, they can be obtained by simple arithmetic. The true comparison with the £275 million figure for 1964 is now £370 million, the balance being made up of £80 million for the estimate which is now made—and which it was not possible to make usefully earlier—of the cost of post-certification and airworthiness development, and, secondly, of £50 million as a general contingencies allowance, which the Anglo-French party working on this project jointly thought it right to make.
Much of the increase from £275 million to £370 million is due to the effects of

design improvements which have taken place during the period and, secondly, to wage and price increases. There is undoubtedly an element of under-estimation, but it was to be expected that as the work moved from the design stage to prototype construction the full extent of technical difficulties on this advanced project would become clearer.
The programme of post-certification and airworthiness work which I was asked about is designed to improve the economics of the aircraft, and will be concerned mainly with increasing the thrust of the engines and the consequent airframe modifications. I was asked about a newspaper——

Mr. Biffen: When the hon. and learned Gentleman says that they are designed to improve the economics of the aircraft, is it not true that this, in turn, must depend upon the acceptability of the sonic boom? Therefore, can he not give us a little more information about when we might expect some further evidence on the effect of the sonic boom upon the sales?

Mr. MacDermot: I cannot. I can only invite the hon. Gentleman to put any Questions on that matter to my right hon. Friend the Minister of Aviation.
I was asked a question about a newspaper report concerning an alleged number—I think 80—of engines which would be, it was said, involved in this development, including the post-certificate of airworthiness work. I have not seen the report and cannot comment on it in detail. I do not know whether the hon. Member who mentioned it was suggesting that this was an unbelievably high figure, but it is right to remember that we are talking of an engine development programme which is extending to 1973, that each aircraft concerned has four engines and, in addition, will need spare engines to support the flight test programme, as well as engines for bench testing and engine development on the ground——

Mr. Brooks: My hon. and learned Friend suggested that the hon. Member for Oswestry (Mr. Biffen) should put down a Question to the Minister of Aviation on the problem of sonic boom. I am one who has put down such a Question recently. Would my hon. and learned Friend now confirm that no field tests have been carried out in this country which in any way indicate the reaction


of the civil population to this expected problem?

Mr. MacDermot: I am not able to assist my hon. Friend or any other hon. Member on problems of sonic boom. I am quite ignorant on that subject and can only repeat my invitation to hon. Members to address any questions which they have to my right hon. Friend.
The Committee also referred to the introduction of incentive contracts. A great deal of consideration has been given to this problem as it relates to development work. By definition, incentive contracts place both parties at risk and, since the Government cannot compel industry to accept their terms, difficult and lengthy negotiation is inevitably involved. There is a need to define closely the technical requirements and the tests by which the product can be shown to meet them before incentive becomes in any way meaningful.
On advanced projects like Concord, this limits considerably the area which is available for incentive contracts. It must also be accepted that, with incentive contracts, the degree of control exercised by the Government over design and management is limited. These are the difficulties about applying incentive contracts to development work.
However, in spite of these difficulties, the Government have agreed that we should seek to negotiate incentive contracts even at the price of not having the same degree of supervision, but doing so with a much more detailed identification of the technical requirements and of the work concerned. We think that this conclusion is in line with the recommendation in Plowden, that the Government should not seek to exercise too great a degree of control over the industry.
In its comments on the TSR2 contracts, the Committee draws attention, critically, to the way in which there was insufficient control over the development of the Olympus engine contract on the TSR2. This might, at first sight, seem to conflict with the previous point, because that was a form of incentive contract, but it was not a true incentive contract, because it contained a provision by which the company was able, under certain circumstances, to carry forward any losses which it incurred under that contract.
The result, therefore, was that—as is agreed in the Treasury Minute—insufficient control was achieved in that case, but that does not alter the basic decision to which I have referred, that we want to try, wherever we can, to introduce incentive contracts in this sphere.
I should like to turn now to the TSR2, about which less has been said by hon. Members in the debate. A very genuine effort was made here to control costs, but the complexities of the project, it is now claimed, had been seriously underestimated. It is equally clear that a project of this size and complexity needs more study and initial work before full development proceeds.
Among the lessons which we have learned from both these cases are, first, to be cautious not to go for over-ambitious projects and to reorganise the project management so as to achieve greater co-ordination of activities in the various fields. As my right hon. Friend the Minister of Aviation has made plain, we have now appointed a project director with technical and executive authority over the main areas of the project and co-ordinating authority over the smaller areas. This scheme for project management is something which is still evolving and no doubt will develop further.
Third—the point which I have just been making—we have learned the need for greater emphasis on incentive contracting. Fourth, we have learned the need for longer project definition and also the definition of projects with a step-by-step approach. Finally, we have learned the need for a greater degree of control over modifications as the project develops.
My right hon. Friend the Minister of Aviation announced on 21st November last that there has been set up a steering group on development cost estimating. This is a group of senior officials from both the Ministry of Aviation and the Department of Defence, who are going deeply into this whole problem of estimating and controlling costs of development projects with the aid of consultants and in consultation with industry. However, as my right hon. Friend has said, he will consider whether, when he receives the group's report, it should or should not be published.
On the subject of cost control over these aircraft and aero-space projects,


we hope to be able to achieve better cost control if we are successful in achieving greater equality of information through post-cost information. This is a matter raised again by the Committee in connection with the Buccaneer contract, but has not been referred to in terms in the debate today.
The Government still adhere to the view that the rights to equality of information and post-costing are essential. We hope to have discussions about this with the industry. The industry has made it clear that it wishes to raise, in this connection, the profit formula and we have invited the industry to submit its views on this subject. We have been awaiting them for about eight months, and have not yet received them, but we hope to be able to make progress with the industry in these matters.
The other question which was raised on the Ministry of Aviation front in the debate was that of the VC10 publications and the cost of the manuals for the military version which are required for maintenance purposes. The figures which have been produced—and which are the contractors' estimate of the cost at this stage, because nothing has yet been agreed—seem surprisingly large, but some of that surprise is dispelled when one realises what is involved in producing those documents.
There are civilian versions of the manuals for the maintenance of the VC10 aircraft, but quite apart from the question of military modifications the civilian versions would not be adequate, or would not meet the needs of the Services; maintenance problems for the Services are different from those of civilian companies. For the most part, civilian maintenance is done at highly-equipped airfields, with specialised staff and much of the major overhaul work is done by returning the aircraft to the makers. The Services require manuals which will enable their maintenance men, who may be dispersed all over the globe and who do not have the same facilities, to carry out necessary maintenance on the aircraft. The manuals must be adapted to and be in a form that will meet those needs.
Some of the manuals are enormous. I think that two of them are over 10,000 pages long and include a great number of technical drawings. Anyone who has

ever been involved, as I was once, in an inquiry arising out of an aircraft accident, and who has gone into detail of what is involved in the maintenance of an aeroplane, will know what a myriad of minute drawings is involved, and how the whole safety of an aicraft will depend on proper maintenance of very small parts.
What is involved here in producing the manuals is going through this whole series of documents literally page by page—I think that 16 classes of manuals are involved—making the necessary alterations that are required as a result of the military adaptations of the aircraft, and putting them in the form that is required for military purposes. This is where the cost is involved. It is not the cost of production; it is not the cost of printing or publication, which is done by the Stationery Office. We are concerned here with the payment for the man-hours of the skilled technical people employed by the manufacturers—who must produce the material—it is only they who can do it. In fact, if we are taking the comparison of a publisher, it is the authors' fees and not the cost of production.
However, the figure which has been referred to for these publications, which I think is a total of some £784,000, is still being examined by the Ministry of Aviation's cost experts. The cost of the publications will be completely scrutinised as part of that exercise. The sum involved here is comparable with the quotations which have been received for other aircraft. I think that there was a reference in the evidence before the Committee to the maritime Comet.

Mr. Boyd-Carpenter: I take it that the hon. and learned Gentleman is also saying, as I read the Treasury Minute to say, that the larger figure of £.1·4 million for the militarisation of each of these aircraft is also not yet agreed, and is subject to scrutiny?

Mr. MacDermot: That is quite correct. It is the whole cost which is subject to scrutiny and is not yet agreed.
Turning to the question of the new construction in the dockyards, to which a number of hon. Members referred, it is right to make clear at the outset that we are not here comparing like with


like; we are not comparing cost with cost. We are comparing the cost to the dockyards of the production of the frigates which they produce with a contract price which was agreed with outside contractors at an earlier date. The disparity referred to by the right hon. Gentleman is a disparity between two different things.
I think that the point was made by the Accounting Officer, Sir Michael Cary, in his evidence that if the figures had been comparing cost with cost we would have got a very different result from that of the £450,000 to £750,000 which is referred to in the Report. The Committee concluded that it was not satisfied that the cost differentials in this case were justified. In the Treasury Minute we have recognised the desirability of keeping these differentials within reasonable limits.
There is a number of reasons why the Royal Dockyards should build warships. These are practical and management reasons, apart from the question of financial cost, which we must weigh in the balance with any additional expenditure involved. First, such building provides essential knowledge and experience of shipbuilding technique required for the most effective execution of refits and repairs, which itself has financial implications. The Royal Navy considers, and has for a very long time considered, that for it to discharge its responsibilities it is essential to have its own dockyard for refitting and repairing its ships. Clearly, if it did not do any production work the problem of equipping and training its own yards and its own men to do this work would be very much greater.
The production work also provides training for designers and overseers who will subsequently be employed on new construction work at headquarters and the shipyards, and it also provides a useful yardstick against which contractors' prices may be measured. Some hon. Members may think that this applies vice versa. But even in a case such as this where the cost may be greater than the contract price—and it has not always been so, for it has sometimes been the other way round—a useful yardstick is still provided because it provides experience to go by both in fixing further

contracts and in negotiating alterations to contracts.
There is also the point which has been made today that the work makes the best use of valuable capital facilities which are available in the yards, and helps to provide a steady, balanced labour loading in these establishments, where the repair work is peculiarly liable to fluctuations. I think that my hon. Friend the Member for Portsmouth, West (Mr. Judd) stressed that there was an under-used capacity of manpower and equipment in these shipyards. This practice helps to make for a more economic use of that manpower and equipment.
Those are the reasons which are judged sufficient to justify some additional payment for new construction, but, of course, there has to be a reasonable relationship between dockyard and contract prices. In the case of the frigates with which we are here concerned, the reasons for the apparent disparity—I stress "apparent" because it is a somewhat unreal one—were as follows. First, the contracts were placed at a time of particular difficulty for the shipbuilding industry in this country, and they covered quite a considerable period ahead.
The shipbuilding companies would probably consider that they did not make sufficient provision for increases in costs in the years ahead when the frigates were being built. Second, it is clear that they did not make full provision in their contracts for overheads. At Question No. 529 there is reference to a comment by the chairman of Thorneycroft's who explained to his shareholders that the company had failed to get a contract in spite of having tendered "at a level which would have involved recourse to the company's reserves"—which, the accounting officer pointed out, was a polite way of saying that it had tendered at a loss.
Thus, we are comparing prices in contracts won in those circumstances with what proved to be the actual costs when other ships were being built in the dockyards, with full allowance being made in those costs for the overheads involved and with the actual increases in prices, wage rates and so on included as well.
I think it right to make those remarks to put the comparison in perspective, but, of course, I accept and agree in general with the Committee's comments on the


importance of weighing these considerations carefully in any case when it has to be decided whether a contract should be put to outside firms or whether construction work should be done in the naval dockyards.
My hon. Friend the Member for Portsmouth, West, raising a number of general questions about the naval dockyards, commented on the wage structure, which he considers to be antiquated. I think that this view was shared by the National Board for Primes and Incomes in its Report on the M rate. As a result of that Report, negotiations and discussions are going on with a view to revising the wage structure, and, as appears from Sir Michael Cary's evidence, the Navy Department is very much alive to the importance of all these questions in efficient management of the yards.
I come now to the "Bloomsbury No. 2 account". This led one or two hon. Members to yield to the temptation, which the right hon. Member for Kingston-upon-Thames resisted, to discuss the wider question of university accountability and the dangers or otherwise to academic freedom in trying to extend it. I shall not yield to any temptation to comment on that, and, as the right hon. Gentleman pointed out, it is a matter which is being considered in much greater depth by the Committee this year.
What we are concerned with here is a particular matter of an unusual nature which was brought to light by the Committee. A loan was made a long time ago—in 1953, I think—of about £1 million to the University of London to assist it in acquiring certain land in Bloomsbury which it would require later for building purposes. In the meantime, the university was drawing rents from the premises, and the agreement provided that those rents were to be used, first, to make a contribution towards the cost of the purchase and, thereafter, to form a fund which was to be earmarked for essential building developments on the estate. This second stage was not reached until about 1958, and that was when the fund began to develop and to build up.
In fact, no project for building arose to which the moneys could be applied before the one to which they are now to be applied, but, as the Committee has pointed out, the existence of the fund

was lost sight of within both the University Grants Committee and the Treasury, with the result that the supervision over the fund which there should have been was lacking.
The Treasury was very properly censured by the Committee for this failure. I think that it is an unusual circumstance for the Committee to use that term, and ever rarer, perhaps, to use it against the Treasury. Usually, the Public Accounts Committee and the Treasury march very much hand in hand in these matters, having a common interest to see that Departments control their public expenditure properly. Perhaps this is an object lesson, if one were ever needed, in the unwisdom of the Treasury becoming a spending Department or having any quasi-spending Department responsibilities. I do not suggest that this incident is in any way the cause of responsibility for the University Grants Committee having been transferred from the Treasury to the Secretary of State for Education and Science, but in any event it provides a perfect justification if one were needed. The Treasury also has done something unusual, that is, it has expressed its regret in the Minute for what happened, and, on behalf of the Treasury, I stand in the white sheet suitable for this occasion.
Perhaps I ought to give an explanation. I think that the explanation is that this loan was a very unusual transaction. It called for a special procedure to be devised in order to watch what happened to the fund when it sprang into existence in 1958. Owing to an unfortunate failure, this drill was not laid on in 1953, with the result that the machine failed to operate to supervise the fund and keep watch on it as it began to grow. I hope that I shall never again have to stand at the Dispatch Box to apologise on behalf of the Treasury for failure to exercise proper control over a fund, even if I do so, as I am now, in respect of a period for which I was not personally responsible.
This is a suitable opportunity for me to repeat how much we in the Treasury as well as in the House of Commons are indebted to the Public Accounts Committee for its work. I am sure that it was a great pleasure to the right hon. Gentleman the Chairman of the Committee to hear the tribute paid to him by some of the younger members of his Committee.
The success of these Committees over the years has depended enormously upon the influence of the Chairman, who, among other thing, has to ensure and maintain traditions not only of independence but of non-partisanship and nonparty non-partisanship in the activities of the Committee. This is one of its great strengths, and I hope that it will be followed and copied in the machinery which we shall set up to deal with the Reports of the Parliamentary Commissioner for administration. They are tow comparable matters. They are both concerned with Parliamentary control of the executive in a technical and specialized field, and we shall learn the great wisdom of following the precedent of the public Accounts Comsmittee on a non-party basis.
As I have made clear in Standing Committee, it is the Government's intention in due course, when that Select Committee is set up, to invite a back-bench Member from the Opposition to be Chairman of it. I hope that he discharges his duties as successfully as the right hon. Gentleman is plainly doing in the Public Accounts Committee.

Question put and agreed to.

Resolved,
That this House takes note of the First and Second Reports of the Committee of Public Accounts and of the Treasury Minute on those Reports (Command No. 3137).

Orders of the Day — MISREPRESENTATION BILL [Lords]

Order for Second Reading read.

Motion made, and Question put pursuant to Order [25th April], That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — LAUNDRY AND CLEANING CHARGES (PRICE RESTRICTIONS)

Motion made, and Question proposed,
That an humble Address be presented to Her Majesty, praying that the Temporary Restrictions on Increases of Prices and Charges (No. 1) Order 1966 (S.I. 1966, No. 1321), dated 21st October 1966, a copy of which was laid before this House on 21st October, be annulled. —[Mr. Alison.]

7.34 p.m.

Mr. Terence L. Higgins: I rise to support the Motion standing in the name of my hon. Friend the Member for Barkston Ash (Mr. Alison) and my other right hon. and hon. Friends. It is unusual for the House to move to a Prayer at this hour of the evening, but I am sure that hon. Members on both sides of the House agree that it is right and proper that this Order should be given adequate debate in the House, because there cannot be the slightest doubt that it is an innovation, a precedent, of great importance, implementing, as it does, Section 26 of the Prices and Incomes Act, 1966. It imposes restrictions in respect of certain laundry and cleaning prices and charges. I am sure that the House agrees that this is an innovation which ought to be discussed in the House.
Perhaps I should make it clear that on this side of the House we believe that there is a case for a voluntary incomes policy, because we believe that this will enable the economy to be operated at a higher level of aggregate demand without inflation than otherwise would be the case. But throughout the great debates which have taken place in the House on


the incomes policy within recent months, we have firmly objected to the introduction of an element of compulsion into the system with respect both to wages and to prices. This Order implements the element of compulsion on prices.
It is important to appreciate that it does so with respect to one particular industry, and this bring out a point which we repeatedly made when the Bill was going through the various stages in the House—that the Act is discriminatory. The object of this Order is to discriminate against a particular industry. We believe that in doing so it will intimidate other groups and other industries so that they will not make price increases which they might otherwise feel are entirely justified. It is essentially this element of intimidation which is objectionable in this Order.
It appears that the one reason why the laundry and dry cleaning business have been singled out for special attention in this way is that they have a remarkably good case for putting up their prices within the terms of the piece of legislation authorising this Order. What concerns us on this side of the House, and I had hoped that it would concern hon. Members opposite, too, is that the cases of all the other industries influenced by this Government will not be adequately ventilated on the Floor of the House, and this reflects the general approach which the Government have had to the whole question of the Prices and Incomes Act. There was not adequate discussion of many aspects of the Bill when it was going through the House.
In particular, it is relevant to ask the Parliamentary Secretary—and I am glad to see him in his place—what has happened to the original Schedule 2 of the Prices and Incomes Bill. He well knows that when we were upstairs debating the various Clauses of the Bill, day after day and night after night, a large percentage of that time was taken up with Schedule 2, which set out the criteria against which price and wage increases should be judged. I estimate that between 15 per cent. and 20 per cent. of the total time which we spent in Committee was spent debating that Schedule.
Right up to 10th August the Parliamentary Secretary and the right hon. Member for Belper (Mr. George Brown), then First Secretary, were adamant in

saying that they would tolerate no alteration or amendment to the Schedule originally set out in the Bill and in the form in which it went through Committee stage. They maintained this attitude right up to 10th August and maintained that the paragraphs of Schedule 2 were correct and should remain part of the Bill.
But only two days later, at the very moment that the Bill received Royal Assent, on 12th August, a completely different Schedule was introduced which set out different criteria. These are the criteria which affect this Order. They were never discussed on the Floor of the House, in Committee or on Report, and they were not given the scrutiny which I believe they ought to have been given, bearing in mind that the Parliamentary Secretary and his hon. Friends knew that they intended to substitute a quite different Schedule for that originally placed in the Bill.
In the terms of this Order, we on this side of the House argue that the deflationary measures which have already been taken—and they are certainly massive measures—have been sufficient in themselves to bring about the kind of relationship between prices, incomes and productivity which the Government say they wish to bring about. But by introducing a freeze on a particular industry the effect of this Order will be either none at all—if the deflationary measures are very severe—or, alternatively, to cork up to the end of the period of freeze and then of severe restraint pressures which, the moment that restraint is released, will immediately put the country back into the position in which it was previously. In addition, this kind of Order will prevent the redeployment of resources in the directions which are needed, because it strikes at the very root of the price mechanism on which we rely to alter the deployment of resources throughout the economy.
Before I turn in some detail to the industry, I hope that the Joint Under-Secretary of State will make one point clear when he replies. The industry is very concerned about the criteria relevant to its decisions now. Only on 25th November yet a further Order was tabled which alters once again the form of Schedule 2 and the criteria relevant to particular industries in the period of severe restraint.
This Order is rather strange, because not only does it introduce criteria for the period December to June, but there appears to be an overlap in the month of December. I hope the hon. Gentleman will make it clear whether the criteria which the laundry and dry cleaning industry is to have regard to in December are those in the second version of Schedule 2 or the new third version. This affects one or two points I wish to raise.
First, there is the question of competition, that aspect of the laundry industry which is most relevant in considering the question of prices. There cannot be the slightest doubt—if there were, it has been removed by the Report of the Prices and Incomes Board—that the industry is extremely competitive, not only in the number of firms involved, but also because they all face severe competition from launderettes, with coin-operated machines, from the ordinary domestic washing machines—with housewives, admittedly aided now by better detergents, doing their washing at home—and also from the development of drip-dry shirts.
The implication is clear. Such an industry would not wish to raise prices unless it had no option but to do so. That is indeed the message which emerges clearly from the Report of the Prices and Incomes Board. It may be argued that the industry can easily absorb the costs put on it by the Government in the form of increased petrol tax, the Selective Employment Tax, and so on. But we must bear in mind the point made in paragraph 8 on page 2 of the Prices and Incomes Board's Report:
An increase in charges leads customers to send fewer articles each week, or to send none in some weeks.
If that is so, it is difficult for laundries to pass on increased costs in the form of higher prices without finding turnover reduced.
I want to raise a matter which has concerned both the C.B.I. and the Institute of British Launderers and Cleaners. The Order was laid without advance consultation with the bodies concerned. This was despite the fact that the Institute specifically asked for meetings with the Government immediately it was known that it was proposed to introduce the Order. It

is not surprising, given the strength of its case, that the industry, together with the C.B.I., feels that the Government have acted in an unreasonable manner in not having adequate consultations before introducing this extremely severe Order, which is wholly based on the principle of compulsion.
The excuse given was that a very large number of complaints against the industry had been made. There is some doubt about precisely how many complaints there have been. The figures vary considerably. I hope that the hon. Gentleman will tell us how many complaints have been made. The best estimate I have been able to obtain is that there have been about 300 since last July. But when one puts that figure against the total number of transactions carried out by the industry in that period—about 40 million—one must concede that it is a very small proportion, indeed. I hope also that the hon. Gentleman will tell us whether these cases which resulted in complaints have been investigated and with what result.
The case for this industry against the Government is so strong that it is necessary to enumerate each argument one by one, and I therefore make no apology for putting my speech into a series of points. The next one I want to raise is that the increases which took place in the industry were justified in terms of the increases in taxation imposed by the Government and, therefore, fall within the criteria for justifiable price increases included in the amended Schedule to the Act.
It is argued in the Prices and Incomes Board's Report that the Selective Employment Tax would probably have justified price increases of about 4 per cent. for laundries and 4½ per cent. for cleaning. But it would be unreasonable to suppose that they could have raised the amount needed to pay the tax and to cover their costs merely by making a flat-rate increase in all their prices across the board.
Clearly, if one increases the prices of one item as against another, the extent to which one's turnover will fall will vary. It may be that the extent to which one can increase the price of, say, cleaning an evening dress is quite different from the extent to which one can increase


the price of laundering dishcloths without a reduction in turnover. It will depend, in economic jargon, on the elasticity of demand.
It may be that an increase for a certain item will be more than that which the Report of the Board suggested should be the average. On the other hand, the increases on other items may well be less than the average. It may well be that consumers who complained to the Government about increases which seemed too high did so without making due allowance for the fact that there were other increases which they had not noticed so much or which were appreciably less or perhaps non-existent. This is the weighted average, the relevant figure which we should be considering. I should be grateful if the hon. Gentleman would tell us how many letters of complaint have dealt with the weighted average of all prices. I should be surprised if the Government have received any on this basis, although it is clearly the relevant basis.
The next matter concerns the figures quoted in the Board's Report suggesting than an increase of 4 to 4½ per cent. might be justified. The figures have been disputed by the Institute, which maintains that the true figure is a lot closer to 5·8 per cent. I am sure that the hon. Gentleman is familiar with the figures. The main difference between the estimates seems to be that the Report begins Chapter 2 by saying,
The laundry industry employs about 100,000 people …
whereas the figure is, I understand, nearer 122,000 people.
If one rounds off 20 per cent. here or there, it does not make very much difference, but I suggest that this sort of rounding off is not legitimate and that the justifiable figure is therefore appreciably higher than that which appears in the Report. I hope that the Parliamentary Secretary will confirm that the figures which the British Launderers' and Cleaners' Association have put forward, based on the Government's own statistics, justify an increase appreciably larger than that suggested by the Prices and Incomes Board. The Board makes no allowance for increases in petrol tax last July, or in the cost of

water, a very substantial percentage increase in a number of areas.
It is alleged that to some extent the cleaners and launderers have anticipated the introduction of the Selective Employment Tax, that they put up charges before that tax became payable. This is not universally the case. A number had held their prices steady for a considerable time, some of them for two years. Others had delayed any increase until the Board's Report was published. In any case, there is here a basic flaw in the Government's economic reasoning, because both the first and second versions of Schedule 2 of the Act are devoted to the supply or cost side of the equation. Each version resolutely refuses to make any reference to the level of demand, a matter which we debated at length in Committee upstairs when the Act was going through the House.
Its relevance in this connection is that the demand for dry cleaning in particular varies a great deal from season to season. As a result, it is usual for dry cleaners to do good business during the summer and then to find that they often have to survive on overdraft or credit facilities during the winter. Given that it was known that the Selective Employment Tax was to be imposed and that the Chancellor would not make credit any easier in the forthcoming winter, it was not unreasonable for any laundry or dry cleaning establishment wishing to survive during the winter to anticipate having to pay the tax over the year as a whole. Indeed, it would be extremely short sighted for any successful business man to fail to anticipate changes which the Government had already announced.
It is true that this seasonal factor is not so important to laundries, but, even so, they may reasonably look forward to a bad winter this year with people necessarily economising because of the Government's measures and therefore being less likely to send stuff to the laundry rather than do it at home or take it to a laundromat. If this was so, this was a good case for a firm raising the tax at a time when it was able to raise it. This would not be such an argument if it were not for the fact that the vast majority of laundry and dry cleaning establishments operate on very fine margins, another point drawn out by the Prices and Incomes Board's Report.
There now arises the question whether it would be possible for the laundry and dry cleaning industry to absorb the increases in the costs of the industry resulting from Government measures. The Report suggests that establishments should seek to amalgamate and to invest more in labour-saving equipment. This is somewhat inconsistent with the Government's withdrawal of investment allowances from the industry. There is no scope, certainly not in the short period of the freeze and the wages standstill period, for the introduction of new machinery and new methods to enable costs to be absorbed as the Board recommended.

Mr. Arthur Blenkinsop: Surely the Board suggested not so much the bringing in of new equipment as a fuller use of the equipment already there and the possible writing off of some establishments trying to go on inadequately using existing equipment.

Mr. Higgins: It is perfectly true that that was the Board's argument. I hesitate to enter the argument of excess capacity as a whole, but I suggest that if the Board reads a number of learned works by the former Chairman of the Laundry Wages Council precisely on this matter of excess capacity and rationalisation it will appreciate that its economic analysis was not correct.
I now come to the actual costs of the wages which the industry has to bear. It is a labour intensive industry and it is extremely difficult to absorb any increase in wages in either laundry or dry cleaning. Are we to understand that for the next month, December, both the standstill and period of severe restraint versions of Schedule 2 are relevant? If so, there is raised the whole question of whether the workers in the industry come within the Government's category of lowest-paid workers.
Persual of the Report makes it perfectly clear that the wages in the industry are extremely low. It is pointed out that the statutory recognition by the Ministry of Labour gives effect to the Laundry Wages Council. The average earnings of laundry workers are low compared with the average for all industries. Surely in these circumstances the right way in which to set about helping lowest paid workers

is by implementation of the Wages Councils Acts, which have been cast aside by the Government in their prices and incomes policy, or to encourage the workers in the industry to redeploy into other industries where better pay is obtainable, or to increase efficiency in the existing industry in order that adequate wages can be paid.
As the Board points out, the industry has had considerable difficulty even retaining the workers which it needs to operate at a reasonable level of capacity. The absurdity of the thing is that the wages council when dealing with wage claims and the level of wages is specifically excluded from considering any change in productivity. That is something which the Minister might well consider when thinking of future action under this heading.
I turn now to the subject of administrative problems and difficulties. There is no doubt that as it stands the Order discriminates not only against the two industries as a whole, but in an odd way on the basis on which charges are calculated. It does not introduce a price freeze if the item of laundry or cleaning is done on a weight basis, but only does if it is done on the basis of numbers. This gives rise to several anomalies which have not been cleared up to the industry's satisfaction. Surely it is absurd to freeze primes for items done numerically, or item by item, without also freezing prices on the basis of weight. We would not like any of them to be frozen on either basis, but at least the Government should be consistent.
It is also true that the base period which is chosen for establishing whether there has been a price increase is somewhat doubtful. It is by no means clear what the position is as far as the highest or latest price is concerned. Are the Government taking as a base for comparison the price at the end of the base period or the highest price within the base period? Is it not unfair to insist that if a particular firm happened to be doing a "two or one" offer during the base period, then it should not be allowed to increase above that level, whereas other firms not making such an offer in the base period are able to raise their prices?
There are other ways in which the implementation of the Order raises some difficult questions. I understand that a


questionnaire has been sent out to firms in the industry wishing to apply for a price increase. Some of these questions are extremely odd. For example, question 8 reads:
What is the expected increase in annual turnover as a result of the proposed increased charges excluding any possible changes in the volume of business?
It is surely quite silly to ask people to estimate what the increase in turnover would be without allowing for the fact that if one increases one's prices the amount of business done will be reduced.
A more worrying aspect of this appears in question 9 where the company applying for permission to increase prices is asked to supply a copy of audited accounts, comprising balance sheet and detailed profit and loss trading accounts for each of the last two financial years, and of any subsequent interim accounts. Unless I am mistaken this is information which private exempt companies, which many laundry and dry cleaning companies are, do not have to provide under any other legislation.
I should be glad if the Under-Secretary would tell us precisely which section in the Prices and Incomes Act enables the Government to demand this from those who feel that they have justifiable cause for increasing prices. I am sure that the Prices and Incomes Bill Standing Committee did not appreciate that this was likely to be done. The Prices and Incomes Board's Report was, by any standards, extremely favourable to the industry. It stressed the element of competition, it pointed out that the 12 large firms in the industry had only one-fifth of the total market, a very low degree of concentration indeed. It also pointed out that the profits being made in the industry were low; indeed, by implication, it suggested that they were so low that is was difficult for the companies to invest as much as they should if costs were to be reduced and the ordinary laundry business was to be made competitive.
The profits as a percentage of turnover before tax for the years 1962–3–4–5 were only 8 per cent., 8·8 per cent., 8 per cent. and 7·4 per cent. respectively. This is a pretty low profit margin. The Prices and Incomes Board went on to say in paragraph 44 on page 15:

In recent years the level of profits in the two industries has been stationary or declining
Why is it that the Government have decided to discriminate against these industries, where the level of profits is stationary or declining, and where their own Prices and Incomes Board has found that the industries are doing everything possible to meet the Government's requirements? It is true that if one looks at the figures on a basis of rate of return on capital one finds that the figure is something like 13 per cent. but this covers a very wide range of different firms.
Can the Under-Secretary clarify whether the Prices and Incomes Report, when it speaks of rate of return on capital is calculating capital on a replacement cost basis? If it is not is it taking historic cost? If so, these wide variations merely reflect an inconsistent way of calculating capital employed.
This Order is extremely discriminatory and it will undoubtedly be used as a form of intimidation against other industries, which may also have an extremely good case for increasing their prices. Our basic objection to it is that it strikes at the very root of the price system upon which we rely to ensure that resources are deployed from one industry to another. This fact alone is likely to mean that the period of readjustment after the prices and incomes freeze and after the period of severe restraint will be a great deal more difficult than it would have been if the Government had taken deflationary measures, but had not resorted to the compulsory method implemented in this Order.
Unless the Under-Secretary can satisfy the House, I very much hope that in the face of the arguments which I have put forward and those which will be put forward by my hon. and right hon. Friends, we shall divide against this Order.

8.6 p.m.

Mr. Stanley Henig: In following the hon. Gentleman the Member for Worthing (Mr. Higgins), I hope that he will not mind if I harp on what was the main theme of his speech, that of intimidation. This leaves me a little puzzled. Intimidation sounds a rather big word, but it is only a few days since we were discussing whether it was better


to stop one man murdering another by threatening to hang him or threatening to put him in prison for life.
For obvious reasons, I am not attempting to draw an analogy between the crime of murder and increasing prices. The point that I am making is that any law-abiding society must in the last resort rely upon what might crudely be termed a measure of intimidation, a measure of compulsion, if it wishes those laws to be adhered to. In this case the Government have decided, for reasons which they think good, and which I think good too, that prices and wages should be frozen.
What is to be the situation if an individual considers that for reasons of his own he knows better than the Government and that his prices or wages should be increased? Any Government has a choice. They can either say that they believe in freedom and the man must be free to do as he chooses, in which case others will follow and those who were previously supporting the Government might say that they had been left in the lurch, or alternatively the Government can say, "This is the law and it is our task to rule the country. This law went through Parliament in the normal way and we must see that it is enforced."
It is my contention that the Government, in invoking Part IV, have done no more and no less than that. The other thing that strikes me as odd is that we hear talk from the other side of the House about measures of this kind and people say, if only the Government had simply deflated and not introduced this measure of compulsion. We all know what deflation means, especially on this side of the House. People lose their jobs. There is a degree of compulsion when someone receives his notice and is told, "We are sorry, the Government's economic policies require that for the moment you become unemployed." Some of us on this side of the House feel that the only thing which makes this Government's reversion to deflationary policies acceptable in any way at all is that an attempt is being made to do something new, to invoke new policies, to try to move away from the sterile, simple, "stop-go" with no social implications and to try, by temporarily freezing wages and prices, to move the economy to a new structure, whence it

will be possible in future, for this or any other Government, to avoid having to revert to these policies. [Laughter.] While hon. Members opposite are entitled to laugh at any misfortune which they think may befall the Government, I hope that they will remember the country and will want to help in any way they can in making the policy a success.
What is new about this element of intimidation——

Mr. Deputy Speaker (Sir Eric Fletcher): Order. We cannot on this Prayer discuss the Government's general economic policy. All we can discuss is whether laundry and cleaning charges should be frozen.

Mr. Henig: Thank you, Mr. Deputy Speaker. As you say, we are discussing whether this degree of intimidation can be invoked in this case, and because this is one of the first of such Orders it is obvious that it arouses some questions of principle. I will stick to the specific point.
The hon. Member for Worthing went on to say that by doing this at this time and discriminating against a particular industry the Government were striking a blow at the whole prices system which, it was suggested, was the best system for meeting the needs of the country. Some of us on this side of the House may have doubts about whether the prices of certain things do just this.
I am not sure that I accept some of the contentions put forward by the Opposition about the laundry industry being highly competitive. I suspect from my experience that, to a large extent, particular launderers have captive markets. I am equally dubious about the advisability of arguing whether the laundry industry should be enabled to make higher profits, and I am extremely dubious that the best interests of the country demand that in future investment should be in the laundry industry rather than in any other industry.

Mr. A. P. Costain: Would the hon. Gentleman help by giving an example of the captive markets of the laundry industry?

Mr. Henig: This is a concept which is as difficult to argue and to define as the concept of competition put forward by the hon. Member for Worthing. In many parts of the country—perhaps not so


much in the big cities, but in the smaller towns—the number of laundries is very much smaller. In some areas there may be one or, at most, two laundries catering for the population. This does not make for a high degree of competition, certainly no higher than in many other industries where we would not normally speak of competition.

Mr. John Biffen: Would not the hon. Gentleman concede that there is also competition between laundries and laundromats and home laundries and that that would apply with equal force in a small rural town with one laundry as it would apply in a large city?

Mr. Henig: I would accept that there would be a margin of competition. I am not prepared to accept that consumers' decisions on whether to use a laundromat or laundry depend wholly or even mainly on pricing considerations.
Although, as you rightly said, Mr. Deputy Speaker, we cannot talk about the general policy on this Prayer, it is peculiarly important, because we are considering whether it is desirable at this stage for an industry either to be allowed to raise its price or to be singled out as an industry which the Government, acting legitimately, say may not raise its prices. Is it right—and this is the crux of the matter—for one industry to be singled out right at the beginning for this kind of treatment? It is my contention that it is right, first on one very simple ground, that, if it were not singled out that industry would, in effect, be breaking the law by increasing its prices, so that in that sense it is compulsion on the Government. But the second and wider point is that this is an action taken under an Act which is part of a policy which some hon. Members may like and other hon. Members legitimately may not like.
But the test of the Government's policy and whether it can win the confidence of the people will be whether it can be seen that the policy keeps down prices. One of the objections to the policy is that it has not done this sufficiently. My suspicion is that prices still show a tendency to rise. I could give one or two examples if it were in order, but it would not be in order. If the Government were to agree to this Prayer, and if an industry which says that it has good reason to increase prices were allowed by the Gov-

ernment to do so, then the whole policy would be in ruins. There would be no consistency whatsoever.
In the interests of those who have supported the Government, in the interests of those whose wages are being frozen, in the interests of those who, in response to Government policy, have not put up their prices, and in the interests of consumers who use the laundry industry and every other industry—in other words, in the interests of a far larger number of people than that with which the hon. Member for Worthing was concerned, namely, those who make profits from the laundry industry—I believe that the Government should resist the Prayer.

8.16 p.m.

Mr. John Biffen (Oswstry): The Government have found an eloquent ally in the hon. Member for Lancaster (Mr. Henig), but it would be a little harsh to hold the Government accountable for his support or views. It is extraordinary for him to advance the proposition that prices shall remain frozen, because this is precisely what is not the Governmen's contention. The Government's contention is that there are certain areas in which price increases should be permitted because they are deemed to arise primarily from Government taxation, and a great deal of our dispute turns exactly around thic principle.
The hon. Gentleman talks about there being no consistency. If he argues that the laundry industry shall absorb entirely the increases in taxation, by the same token of consistency he must also be anxious that the hotel industry shall absorb entirely the additional costs arising from the Selective Employment Tax.

Mr. Henig: Mr. Henig indicated assent.

Mr. Biffen: The hon. Gentleman nods his head vigorously. This is a fascinating doctrine on which we shall be interested to hear the views of the Under-Secretary of State. The hon. Member for Lancaster has achieved, I will not say the unique distinction, but the somewhat rare distinction of being a Government backbench Member enthusiastic in his support of the Government's policy. Therefore, it would be a bit rough if these way-out views were by some accident associated with the views of the Government Front Bench. Are we to expect


that some representation will be made soon to British Railways to rescind the almost swingeing increases which they have made in their hotel and meals charges? I will not pursue that further, because I have greater respect for the rules of order. [Interruption.] The hon. Member for York (Mr. Alexander W. Lyon) can chance his arm later.
If I understood the hon. Member for Lancaster aright, in his general introduction about the new concepts of freedom which were being elaborated by the Government in the constructive guise of an incomes policy, it seemed to me that he got perilously near to advancing the thesis that no worker is free to market his skills and experience for the price which a willing employer is prepared to offer.

Mr. Henig: Would the hon. Gentleman say how free a worker is to do this when there is no employment available for him?

Mr. Biffen: Of course, a worker who is unemployed is not able to command the earnings of an employed person—that is obvious. If, however, the hon. Member is suggesting that this policy is the alternative to unemployment and to measures of deflation, I must tell him that that was the argument which was being advanced from the Dispatch Box before 20th July. It might have had some possible persuasive power then, but now it strains our credibility beyond what we can bear.
Let us, therefore, return to the introductory remarks of the hon. Member for Lancaster——

Mr. Deputy Speaker: (Sir Eric Fletcher): Order. I am sorry to interrupt the hon. Member, but he ought now to address his remarks to the Prayer.

Mr. Biffen: Thank you, Mr. Deputy Speaker. I think I have made the point about the implications of the hon. Member's remarks concerning the freedom of workers to bargain wages that employers are prepared to offer.
The laundry Order is undoubtedly the first of a series which will demonstrate the whole nature of the charade which passes as a prices and incomes policy. I shall limit my remarks because a number of my hon. Friends wish to speak and the

ground has been fully, competently and cogently covered by my hon. Friend the Member for Worthing (Mr. Higgins).
The Schedule to the Order states that it will apply to
undertakings or persons holding themselves out to the public as prepared to launder or clean any item of a description …
The first question which I ask myself is why this industry was selected. Why laundries? Reference has been made to the number of complaints. The figure suggested by my hon. Friend was 300, a figure which has been widely reported in the Press. What the Under-Secretary has to say about this will be followed with close attention. Was it 300 up to the point at which the Government acted? If so, their action has not stopped presumed public disquiet, because the Answer given to me on Friday by the President of the Board of Trade was that 1,000 complaints had been received about laundry charges. Does this mean that there have been a further 700 complaints since the Government made the Order?
We are dealing here with an industry which deals with part-worn goods. The two activities which are most likely to give rise to general public griping are the two industries concerned with part-worn goods: laundries and motor vehicle repairs. I can guarantee that on any consumer panel there will be more generalised complaints about those two industries, largely, I believe, arising from the nature of the work they do.
Therefore, if the Government use all the means of publicity available to them asking for generalised complaints from the public about the goods and services that people receive, they will, I am sure, receive more complaints about activities dealing in part-worn goods, particularly the laundry industry and motor vehicle repairs. Therefore, I am not in the least surprised, for example, that motor vehicle repairs have now been referred to the Prices and Incomes Board.
The second question which must occur to anyone studying this rather bizarre story is what part in all this the Prices and Incomes Board plays. It gestated for nine months on this industry: it was referred to the Board in January, and the Report came out in September this year. It is still somewhat of a mystery why


the reference concerned only laundry services for the public and not for the valuable and significant industrial laundry sector. None the less, at the end of it all the Prices and Incomes Board came up with a Report which, as far as I can see, was a clear exoneration of the laundry and dry-cleaning industries. Nobody could turn to that Report for ammunition for an attack to be mounted on restrictive practices or price-rigging. Therefore, one is bound to conclude that there was a political motive both in the reference of the laundry industry to the Prices and Incomes Board and in the way in which that Report has been dealt with since it was received.
I am not entirely convinced that this political action has been all that harmful to the laundry and dry cleaning industries. I am not saying that this is an industry which in totality now carries a heavy and monstrous burden placed upon it by an efficient and selective Government. When the story is unravelled, it will be a little more diffuse than that, a little more difficult to follow and a little more intricate, because there is no doubt that what has happened is that a very large number of the laundries and dry cleaners, because of the seasonal nature of their work, put up their prices almost straight away. Therefore, if we are dealing with a case of fairly substantial door-locking after the exodus of the horses, this is one example of it.
It should not be thought that I want to be too partisan about this, but the example which I should like to quote is that of the co-operative laundries. On 21st August, we had the Financial Times saying:
Co-operative laundries throughout the country have been advised to raise prices by imposing a surcharge of between 5 and 10 per cent. on their customers.
It went on to say:
It is understood that Co-op laundries handle business approaching £10 million a year.
As I calculate it, that is something like 10 per cent. of the total turnover of the laundry industry. I had no doubt that many other laundries did likewise. Therefore, what one would like to know from the Under-Secretary when he answers the debate is how much of the total laundry turnover he thinks was affected by

increases in prices before this Order was made.
What I detest about the Order is its completely arbitrary nature, because it is designed to give the public the impression that here is a major action of price control when its actual effect is to fall upon those laggards who, perhaps, from a misguided sense of national duty held back their price increases. They are the people who are caught by this measure. It seems to me that this is something upon which all who are interested in the fortunes of either workers or of manufacturers under a prices and incomes policy should ponder long and seriously.

Mr. Alexander W. Lyon: Without being out of sympathy with the point that the hon. Member is making, may I ask whether he will now join me in urging the Government to make a reference under Section 27 of those parts of the industry which did put up their prices before the Order came out?

Mr. Biffen: No, of course not, because the whole thing is convoluted nonsense from first to last. I have a record of opposition to this policy which is long and honourable and I am not deserting it now just to give the hon. Member the vicarious satisfaction of going along to the co-op and telling them that they must go back to the price level which they had before. After all, were they supposed to pass on the Selective Employment Tax or were they not? All these are the kind of questions which are left half answered as a result of this arbitrary action being discussed this evening.
Again, the hon. Member for Lancaster assumes that as a result of this Order prices will be frozen. But will they? All this Order requires is that they shall inform the Government and will then wait for either assent or dissent from the Government for price increases they propose. This Order itself does not freeze prices, and hon. Members opposite who are under that illusion have been brow beaten—which is probably the good fortune of back benchers, believing almost anything which will be of advantage to their Front Bench. But they should disabuse themselves of these misconceptions.
The Under-Secretary of State, I hope, will tell us how many applications for


price increases have been received under this Order since it was published and what answers the Government have given. So there we are—three questions; one as to the percentage of the laundries which had in terms of turnover probably increased their prices before this Order was brought in, and the other two points which I just mentioned.
Then weight is mentioned in paragraph (1) of the Schedule, where are the words
other than (i) charges by weight ….
What this means, roughly, is industrial laundering, a good deal of which is charged on the basis of discounts. How will prices be affected by changes in discounts?
These are the kinds of questions which have to be answered unless we are to be left with the conviction that this is entirely an arbitrary public relations exercise on the part of the Government, harmful inasmuch as it has effect but much more harmful in the sense that it seeks to perpetuate a belief that something has happened which in fact has not. Of course, in that, it is of the very essence of this entire prices and incomes policy.
Finally there is the point, also mentioned by my hon. Friend the Member for Worthing, on the question about investment. The hon. Member for South Shields (Mr. Blenkinsop), I think, is under a slight misconception here, because, as I understand it, the Prices and Incomes Report concerning dry cleaners suggested that there was over-capacity in investment in their industry, but as far as launderies are concerned there was a necessity for increasing plant. If that is so, we immediately think of the latest White Paper on the severe restraint, and individual companies being allowed to increase their prices in order to provide sufficient investment. So even if dry cleaners cannot plead, can launderies not plead that they should be more favourably considered?
Indeed, the more I think about this Order the more it seems to me to be a symbol of the arbitrary nature of the Government's incomes and prices policy. They select just one of the many service industries which might have been selected, and above all this is a political Order. It is, therefore, I think an indi-

cation of the futility of the idea that there is some voluntary industry-Government consensus which can determine the levels of prices or incomes or investment, because ultimately the Government will decide, and because it is a Government decision, it will be political. We are seeing witness of that this evening.

8.33 p.m.

Mr. Arthur Blenkinsop: It is very hard to discern what course the Opposition are trying to run with this Prayer against the Order. We had the hon. Member for Worthing (Mr. Higgins) making out the case, so far as I could understand it, that this was a dangerous and crippling Order which might have a very serious effect on the industry, and he invited us to be very concerned about this, for this reason. On the other hand, the hon. Member for Oswestry (Mr. Biffen) made it very clear that he disregards this point of view utterly. He regards the Order as utterly unnecessary, as having no effect, or in any way inhibiting the laundry industry and, indeed, even rather futile and useless, as I understand his argument.

Mr. Biffen: I am sure the hon. Member would not wish to misrepresent me. I was saying that surely the extent to which this becomes harmful to the future development of the laundry industry depends entirely on how long this Order stays in force and the degree of rigour with which it is implemented.

Mr. Blenkinsop: The hon. Member for Oswestry has made clear the point which I thought was not sufficiently pressed by the hon. Member for Worthing, that this is not a harsh, restrictive Order. In many ways, from my point of view, it is not harsh or restrictive enough. It allows a great deal of flexibility. It allows applications to the Board of Trade for permission to increase prices, and it is not completely restrictive in that sense. Therefore, I feel that the two hon. Gentlemen ought to get together and have some discussion before they initiate a Prayer of this sort.
Personally, I welcome the Order, but I have some anxiety about whether it is strong enough. I appreciate the point that there are a large number of firms which increased their prices before the


Order came into effect, and this was discussed some time ago in the House. It is understandable that there are firms which feel it unfair that they have been singled out and not allowed to increase their prices without special appeal, whereas others got away with it earlier. I have some sympathy with that point of view. But presumably that cannot be the main basis of the attack on this Order.
As was explained by my right hon. Friend the Secretary of State for Economic Affairs originally, this is a holding operation. Whether further action should be taken under Section 27 is a matter which is still open to my right hon. Friend. I hope that we may hear something at the end of the debate about how far the investigations which were being pursued into this industry have got, and whether they are likely to result in an Order under Section 27 which deals much more powerfully not only with holding prices with the escape route that is available, but also going further and actually reducing prices.
I find it extraordinary that apparently both hon. Gentlemen opposite appear to regard the Board's Report on the laundry industry as an encouraging one. It is an extremely polite, well-written and diplomatic Report. It is clear and succinct. However, I should not regard it as a Report saying that the laundering and dry cleaning industry has done well. The reverse is the case. It points to a whole host of problems which need to be solved and which have not yet been solved.
I find it amazing that the hon. Member for Worthing should welcome it as a Report congratulating the industry for being fully competitive. There are references in it—in paragraph 43 on page 15, for example—to the fact that greater price competition would also help to reduce over-capacity. That does not suggest that there is sufficient competition at present. There are many comments about the unused capacity in the industry and about the need for more amalgamations so that capacity can be more efficiently used. There are a great number of comments of that sort, which do not support the arguments raised by either of the hon. Members who initiated this Prayer; indeed, I wonder if they have read the same Report. It has been available to us for some time.
I have considerable anxiety, as I have said, about whether the action taken by my right hon. Friend in this case is adequate. I welcome it, but I do not feel that it should be the end of the road. I think that this is only the rather tentative, cautious, and careful first move. I feel that the real gravamen of the attack on this Order will become increasingly clear if we go into the Lobbies tonight. It is an attack upon any attempt to control prices at all. I think that this must be evident.
To my mind this is a very modest first Order. I appreciate that the Government may wish to initiate this process in this way, but I hope that tonight we shall hear from my hon. Friend that the Government are determined to carry on with this policy and develop it, and that should it prove necessary they will take sterner action which I think might be necessary in this and indeed in other spheres.
The hon. Member for Worthing gave us a rather amusing account about different forms of laundry work and differing charges. He instanced dish cloths, as well as other items. I should have thought that dish cloths were excluded from this Order and came within the mass of laundry which is charged for by weight or volume.

Mr. Graham Page: Surely a dish cloth is a towel?

Mr. Blenkinsop: I should have thought that nowadays most people washed their own dish cloths.
I was not clear whether the hon. Member for Worthing, and I suppose one should say the hon. Member for Oswestry, who supported him, or opposed him, or whatever his view may be, was in favour of industrial laundry being excluded, or whether he wanted it included. Most of the complaints have been about domestic laundry, and this is presumably why industrial laundry is not included. I do not understand the rather complicated argument advanced by one hon. Gentleman who said that we should pay no attention to the complaints which were being made. He seemed to say that there would be complaints in certain fields and that we should pay no attention to them. I should have thought that this was the last thing that we should do. Surely we should pay a great deal of attention to


complaints. If there have been many complaints, I am delighted that the Government have shown some sign of taking action. I hope that my hon. Friend will not be deterred by the rather frivolous attitude adopted by hon. Gentlemen opposite, but will press on, and will give us a good reason why Section 27 was not used in this case.

8.43 p.m.

Dame Joan Vickers: I am glad of the opportunity to take part in this debate because two points have not so far been made. First, we are told that this discriminates against the industry; our objection is to discriminate against one part of it, not the whole of it, and if we are going to be consistent surely we should bring in all parts and not attack just one part.
The other point in which I am interested is that this represents an attack on the poorer people of the community. It is the poorer people who take their laundry to laundrettes, wash houses, and so on. These are the people who will get no protection; it is only those who can afford to go to a laundry who will receive the protection of price control.
It is not only industrial laundry which is charged by weight; laundrettes calculate their charges on the same basis. Hon. Gentlemen opposite, I hope, understand the problem facing their constituents because they should know that many people who take their laundry to the laundrette, in a perambulator, will not be protected. Protection will be afforded to those people who have their laundry collected and brought back in nice cardboard boxes.
The Government state that they are out to help the lower paid workers—and we have heard such a lot about this over the last few days—but they are the very ones who are going to penalise the lower paid workers by this Order. I hope that some hon. Gentlemen will have second thoughts about this Order. It will not discriminate against the large laundries, but it will discriminate against the small people, those who already have difficulties. I am always astonished that laundries were not scheduled as an essential industry, as they were during the Second World War. That was one of the ways by which the Government helped women to go out to do some other

work. Such work cannot be done now because of the financial squeeze, but during the Second World War women were able to go out to work in order to pay for the items of laundry which they sent out. They earned sufficient money to pay for sheets and those other items which women should not be required to launder themselves.
There is also discrimination against contract laundries. Contractors can ask whatever price they like and it is up to the person concerned whether or not he will accept that price. For instance, will Her Majesty's Services have to send contracts to the Government to see whether contractors are quoting an adequate price? This is important. Contractors take a great deal of business from the other laundries.
Often, when we talk about competition, we are thinking of London and other big cities. In the South-West we are lucky to have one major laundry. Most laundries in my constituency have already gone out of existence because they could not get sufficient work. There is in my area a laundry which is perhaps known by the hon. Member for St. Ives (Mr. Nott). This laundry has receiving stations in such places as Newquay, Teignmouth and Launceston. There may be talk about cutting prices, but it is impossible for that laundry to do so. It has to send its vans to the collecting centres, and it has to contend with the extra petrol tax, the maintenance of its vehicle and the cost of licences for those vehicles which all help to increase the company's expenditure. I made inquiries over the weekend and discovered that the laundry had made no price increase since January, 1965. However, it had to have an increase to conform to the Laundry Wages Council's award. Since 5th September the Selective Employment Tax has meant an increase of one halfpenny in the £. Therefore, the increase would appear to be extremely reasonable.
I should like to ask the Minister whether he does not also consider this to be a question of Income Tax under Schedule F. Incorporated companies have to pay dividends. The share capital of over 70 per cent. of those companies consists of preference shares on which they are entitled to return 6 per cent. As I understood it, the purpose of the tax was to encourage


productivity. The present dividends have to be paid in any case. There is the levy on dividends, and I should like to know whether the Minister will take into consideration prices which will be fixed in the future. The reasons for the levy are not clear, and this matter is extremely important.
Hon. Members have spoken about the use of labour. Most of the laundry companies that I know of operate various schemes which have been in existence for many years. These schemes are helping to increase productivity. Also, the basic rates of pay are higher than those set by the Laundry Wages Council. Most laundries will find their profit margins to be extremely low. There will be fewer workers in the laundries. There is no investment allowance for these companies, particularly those companies in non-development areas which receive no help. Banks have been asked not to help the service industries, so these firms are in a very difficult position whichever way they turn. In many areas it is not possible for these firms to get rid of many more employees, even if they wish to do so, because they cannot afford to buy the machinery to replace the labour, to find the right type of machinery, or to make room for it in their existing buildings.
In the South-West we already have a 2·7 per cent. rate of unemployment. This time last year it was 1·8 per cent. Little alternative employment exists. The other day a skilled worker came to see me because he had lost his job, and I asked him what employment he had been offered since and he told me that at that time the only job he had been offered was as Father Christmas. That was not a job for a skilled man, and it did not help to keep himself and his family.
I also want to ask a question about the point that two-thirds of private firms which are exempt from having to send in audited accounts. I gathered that this applies to those firms, and if they do not have to send in their accounts every two years why should others? I hope that we shall be told, too, more about the investigations made in respect of complaints which have been mentioned by my hon. Friends. Will Ministry inspectors make the investigations, or will it be done by local weights and measures inspectors or by health inspectors?
I also want to refer to the question of cleaners. In preparation for this debate I got in touch with several laundries in order to obtain their views, and also some cleaners. A cleaner who works not far away from my flat rents his offices from the Ministry of Public Buildings and Works, which proposes to increase his rent from £350 to £875 per annum. He tells me that as a result of negotiations the increase has been reduced to £600 per annum. He had a seven-year lease in 1960, so it is about to run out, and now we have the Ministry putting up the rent and this might put him out of business altogether.
He has already had imposed upon him a 10 per cent. increase from the people with whom he contracts his cleaning and he also has extra costs for packing, paper, lighting, parcel postage, machinery, maintenance charges, and pay his own S.E.T. On top of that he will have to pay this extra charge which is being demanded by the Ministry. This could put him out of business.
When the Minister replies I hope that he will be able to undertake to look into these individual cases, and that he will take special note of this case I have just mentioned. I can give him the address of the cleaner, and I hope that he will be able to see that either the rent is not put up or that the cleaner is able to raise his prices where necessary.
Dry cleaning has not been mentioned much in this debate. I understand that there are about 1,700 shops belonging to one combine alone. I have made inquiries and I gather that since July only four complaints have been made. Reference has already been made to the fact that this is a seasonal trade, and in my opinion it is likely to be even more seasonal at the moment, because if there is one thing that people can economise on it is having their clothes cleaned. They either clean their clothes themselves or make them go without cleaning a little longer. Dry cleaning will be hit more than most other parts of industry. The Order discriminates not only against one part of the industry as compared to the other, but also against the whole industry as compared with other industries, and it hits hardest against the poorest people in the community.

8.55 p.m.

Mr. Kevin McNamara: I would first congratulate the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) on the point which she made about the bag-wash. I agree with her wholeheartedly. The Order discriminates against people who take their washing in bags to the local laundry, whether it is coin operated or manually operated. I hope that my hon. Friend will clear up this point.
My main purpose in supporting the Order is that it is essential at the moment for the type of price control which many of us on this side want to see. One of the arguments urged against effective price control is that it is too hard to police and supervise, but according to the Report of the Prices and Incomes Board over 1,400 different laundry establishments are concerned. If we can police them effectively, surely we can have the type of price control which we would like to see.
The hon. Member for Oswestry (Mr. Biffen) said that this was a case of locking the stable door after the horse had bolted. This is largely true. We would therefore like to have a reference back, as my hon. Friend the Member for South Shields (Mr. Blenkinsop) said. We would like to see these prices effectively frozen or cut back. Many of these prices were raised to meet the effects of the Selective Employment Tax long before it came into operation. This happened through the whole range of service industries.
The point surely is not that we have discriminated against laundries, but why have only laundries been mentioned? There is a whole host of other service industries which could have been referred to, and prevented from putting up their prices. An example is that of hair dressers.
I am surprised at the tremendous defence of this industry which the Opposition have launched, saying again and again that the Report of the Prices and Incomes Board—this was especially the point of the hon. Member for Oswestry—was an exoneration of the industry. Yet paragraph 53, discussing the question of whether amalgamations could help to absorb future costs, says the advantages offered are:
… a better combination of commercial and domestic laundry activities, the closure

of under-utilised establishments and the fuller use of other establishments, the use of modern labour-saving equipment, and the rationalisation of delivery services.
Anyone who lives in a modern suburban "semi" and has seen, day after day, half a dozen different laundry vans from half a dozen different companies going down the road knows that there is a great need for rationalisation of the delivery services. This is not an exoneration of the industry but an outright condemnation of it—as my hon. Friend the Member for South Shields said, in very polite language, but a condemnation nevertheless.
The hon. Member for Worthing (Mr. Higgins), speaking about the question of the industry being able to rationalise itself by competition and proper pricing agreements, seemed to assume that we were back in the days of laissez-faire capitalism, with everyone undercutting everyone else until there was one monopoly laundry service. We have not got that—[Interruption.] The hon. Member said, "Leave it to the mechanism of the market". This is what he meant, but we have not got this mechanism at all. There is very little competition in price: it is purely on service——

Mr. Biffen: I take the hon. Member's point, but how does he account for the very considerable changes in the structure of the laundry business—which is indicated in the Report—involved in the wholesale closures of laundries, if this does not come about as a result of competition?

Mr. McNamara: I accept that point, but I do not accept the point to the extent to which hon. Members opposite are making it, for this reason: until the war there were many small laundries, many employing one or two people, but now they have been rationalised to the point where they employ perhaps 20 to 30 people. With the type of laundry I see envisaged by the Report there would be perhaps one or two laundries for a very large city, having an efficient use of manpower, with larger machinery, better servicing and the like, which would entail the disappearance of the smaller laundries and achieving the efficiency that we want to see.

Mr. Geoffrey Wilson: What would the hon. Member do with smaller


places? The city where I live has a population of 13,000.

Mr. McNamara: I think that the hon. Member for Devonport made a very good point when she said that an efficient laundry could arrange for collection and delivery centres within the West Country. I should have thought that the hon. Member was in one of the areas covered by the hon. Member's laundry.
I do not wish to detain the House for very long. I regard the Order as only a first step, and a very faltering first step, towards getting the sort of price control we want. If we can get price control in laundries we can do it throughout the whole service and retailing industries, and get the type of prices and incomes policy which many of us on this side of the House would like to see.

9.1 p.m.

Mr. David Crouch: I think that there is some misunderstanding in the Chamber tonight. We as the Opposition are really complaining not about a storm in a wash tub, laundry or dry-cleaning establishment, but about the strong-arm action of the Government, strong-arm action which is welcomed by some hon. Members, and I tremble at the way and spirit in which they welcome it. I tremble at the references on this type of action by the hon. Member for South Shields (Mr. Blenkinsop), who has now left his place. I had hoped that in the past two years the Government would seek to make our economy work. We are talking about a free enterprise economy—not an economy to be sat on, to be buried with the trade unions, but an economy to work. Apart from their strong-arm action, the Government have shown that their left hand does not know what their right hand is doing, or what effect their right hand might have in economic affairs. They have pegged incomes and prices, and the trade unions and the T.U.C. have had their orders.

Mr. McNamara: I am grateful to the hon. Member for giving way. The whole point of part of what I was trying to say was that prices have not been sufficiently pegged. It would be wrong, as the hon. Member for Oswestry (Mr. Biffen) pointed out, to look at the Order and say that prices have been pegged.

Mr. Crouch: Admittedly, prices have not been sufficiently pegged under the Prices and Incomes Act, because that is why the Order has been introduced, especially to peg a sector of prices in the laundry and dry cleaning industry. We must see what effect the Government's total action in its freeze is having. On the one hand, we have wages severely pegged and the trade unions having no say in the matter. Of course, they are incensed. The public is incensed, and it looks for every sign of price rises. It has been encouraged by the First Secretary to report such signs. I am advised that there have been 350 complaints to the Department of Economic Affairs about this industry, and I hope that this figure will be commented on tonight by the Parliamentary Secretary when he replies. I would be grateful if he would say how those complaints are made up as between the laundry industry and the dry-cleaning industry, and over what period they have been gathered.
We are talking of an industry in which there are 150 million transactions a year. In all the research that has been carried out in the industry there is no statistical record of price increases. This is a service industry dealing with people's clothing, and it is the troubles which people's clothing suffer which are the biggest element in the complaints—not prices. I shall be very interested, therefore, to hear what the Parliamentary Secretary can tell us about the exact nature of these price complaints.
My hon. Friend the Member for Worthing (Mr. Higgins) has reminded the House that this is a highly competitive trade, a trade in which price is vital and is always most carefully considered. It is a service trade in which value for money counts. The price increases made recently, since the Budget, were made after very careful consideration, bearing in mind that a price increase, for whatever reason, will inevitably reduce turnover and may well drive business to the man next door.

Mr. Alexander W. Lyon: This point has been made on a number of occasions, and I am glad to have the opportunity to ask the hon. Gentleman directly about it. The Report of the Prices and Incomes Board shows that prices have been going up regularly by 10 per cent. a year and


that the larger units in the laundry trade have been increasing their revenue by 6 per cent. a year. How does this accord with the hon. Gentleman's argument?

Mr. Crouch: That is no answer to what I am saying because the Board goes on to say much more about prices in its Report. For instance, in paragraph 55 the Board says:
We do not consider that there is scope in the domestic laundry industry for the absorption of increased costs through reduced profit margins in view of the need for further investment in modern labour saving machinery.
In paragraph 56—I do not want to weary the House by reading too much, but this is closely relevant—the Board says:
Price increases so far in 1966 would seem to have been at a rate no greater than that experienced in recent years and to result from the general pressures on costs, though to some extent the Selective Employment Tax would also appear to have been anticipated.
I do not deny this. My hon. Friend the Member for Worthing has already pointed out that we are here discussing a seasonal trade, a trade in the dry cleaning sector of which profits are made only in the summer and spring, with losses made in the winter. Nevertheless, wages and taxes have to be paid week in week out throughout the year. This trade cannot draw on overdraft to pay increased costs and Selective Employment Tax, and it is not altogether wrong, in my submission, that the dry cleaning sector should have anticipated its year's budget and cost requirements.
The industry has a good record on price levels. Dry cleaning prices in this country are among the lowest in the world. The average price for dry cleaning a suit is 8s. 6d. It was about 8s. before the imposition of this extra tax. Perhaps the exact figure recommended by the Prices and Incomes Board for the increase may have been not 6d. but 4½d., but we are here dealing with commerce, and it is a round figure which is called for. There are some items of dry cleaning on which no increase in price has been put at all. The price of cleaning a suit in 1913 was 4s. 6d. The rate of price and cost growth in this trade has been remarkably low.
I remind the House of the range of price levels which have obtained since 1957. In the four years 1957–61 price levels were steady. In 1961 there was a modest in-

crease. Prices remained level again for three years from 1961 to 1964. In 1964, due to increased pressure of rising costs of fuel, water and rates, prices went up again. But basically this trade has had a stable price record.
In January this year, as the House knows, the trade was referred to the Prices and Incomes Board, and the reason for the reference was
… the importance of these services to a large section of the public
This is not a little industry to be dismissed lightly. It is a service considered by the Government of sufficient importance to the public to be given serious consideration. It is not an industry to be run down or to be turned aside and lost in an advance towards progress. It is an industry about which the Government are concerned. I believe that the left hand of the Government does not know what the right hand is doing. For example, this business has lost investment allowances—and investment allowances mean the installation of labour-saving machinery. They could be described as allowances for the redeployment of labour from a service industry.
The launderers and dry cleaners have lost investment allowances and they have had imposed upon them Corporation Tax, which is a very heavy burden for both big and small companies to bear. They were appalled by the introduction of S.E.T. in the spring of this year. Let us not forget that the idea behind S.E.T. was to impose an addition to the selling-price of services to the customer, to impose a tax parallel to Purchase Tax. S.E.T. is intended to put up prices. It is a tax to remove some excess purchasing power from the economy by raising prices. This point was made most ably by my hon. Friend the Member for Oswestry.
This tax has been applied, and in some cases the result of the tax has been anticipated. I have already given reasons why it has been anticipated and why some prices have gone up. Those in laundry and dry cleaning business are prepared to be consulted, and they are complaining that they have not been consulted by the Government. The Government took action for the wrong reason. The right hon. Gentleman should have consulted the industry and its comprehensive associations which represent as much as 90 per cent. of the industry. But there was no


consultation with the launderers and dry cleaners and no consultation with the C.B.I. That is my main complaint. This is not a storm in a wash tub. It is a storm in this Chamber.
I put a question to the Parliamentary Secretary which I hope he will answer. Do not the Department for Economic Affairs understand that S.E.T. was meant to hit the consumer? Will they not admit that it was meant to raise prices in some sectors and that this was the Chancellor's intention? I believe that this industry was right to take the action which it took and that the Government were not right in failing to seek some consultation with the industry and, instead, taking this high-handed and strong-armed action in an arbitrary manner. The trouble with the Government's economic measures this year is that they have been "one damn thing after another". I hope that you will forgive me for using that word, Mr. Deputy Speaker, but I was thinking of it as only a three letter word. The Government did not think out the implication of S.E.T. The tax was meant to redeploy labour. In the dry cleaning business it will simply remove the profits and close businesses if this Order and this special freeze is applied. For this reason I appeal to the House to accept this Motion.

9.15 p.m.

Mr. Ted Fletcher: The hon. Member for Canterbury (Mr. Crouch) is at least honest. He supports the Motion because he believes that the Order should not have been made and that the charges made by the laundries are reasonable. That view is in contradiction with the point of view put by some of his hon. Friends—that the Order discriminates because it applies to some sections of the industry and not to others.
I am sure that some of my hon. Friends will agree with me when I say that we ourselves are not wildly enthusiastic about the Order. The hon. Gentleman has referred to "strong arm methods" but I certainly do not think of the Order in such terms. It is, indeed, a tentative, faltering step towards the control of prices. From that point of view we welcome it. But we should concentrate upon the question of discrimination.
Most working people do not send their washing to a laundry. Many of them do it at home in washing machines. If they happen to be working, they have to go to launderettes, which are outside the scope of the Order. Their prices, therefore, can be increased, for there is no supervision in their case.
Only people in comparatively affluent circumstances can send their personal washing to a laundry, so the Order is discriminatory in effect because it controls prices for a section of the population which can possibly afford increased prices but discriminates against working class people who have to do their laundry at home or at launderettes at a time when they are subject to the wage freeze.

Mr. Eric Lubbock: What about old people living on fixed incomes who have not the strength to do their own washing or have not the facilities at home to do so and therefore have to send their washing to the laundry, whether they like it or not?

Mr. Fletcher: One cannot generalise, but I make the point that most working class people have to do their washing at home or go to a laundrette, but, of course, in exceptional circumstances, when people are very old or ill, they have to send their washing to a laundry. By and large, it is affluent people, who used to employ what they called "washer women" on the cheap in days gone by, who send their personal clothing to a laundry. There is thus discrimination under the Order.
Another aspect is that industrial clothing is sent to a laundry by its weight and this also is exempted from the Order. It is not beyond the bounds of possibility that laundry companies, having had general laundry work prices frozen, will increase the cost of the laundry they take by contract or weight so that what they lose on the swings they gain on the roundabouts. Some of them may get round the Order in that way.
The Order should be supported because it is a tentative step in the right direction. Hon. Members opposite have ideological reasons for opposing it. They believe that it is the thin end of the wedge. But I believe that the Government are taking the right steps in implementing the incomes policy although they are being


hesitant and are not being as vigorous as they should have been on this Order.

9.20 p.m.

Mr. David Mitchell: The Government's attack on businessmen, traders and small businessmen is gathering momentum and the Order is another step in this direction. Because it is so blatantly unfair, it is liable to provoke to justified anger the business community in general and it may even persuade some of them that it is time to come forward and take a leading part in the political battle which obviously lies ahead.
I was fascinated to hear the hon. Member for Kingston upon Hull, North (Mr. McNamara) refer to the need to police the industry and I thought that the phrase "police the industry" was an interesting insight into Socialist thought. The laundry industry was investigated by the Prices and Incomes Board which gave it a generally clean bill of health on prices but drew attention to two major needs. One was for a reduction in the amount of labour employed in the industry and the other was for greater investment in new and modern equipment.
It is also true that to a considerable extent there is competition between the laundry industry and people who have washing machines at home, as hon. Members have said. If the industry is to keep its customers and be a paying proposition, it will have to attract customers by being able to offer better service and better cleaning than people can get from their own washing machines at home. That underlines the need for the modernisation of the industry.
What we are talking about tonight is the epitome of the need of so much of Britain's industry, so much of which needs modernisation. But from where is the money to come to carry on this modernisation? This surely is a legitimate purpose for the profits of the industry. I am well aware that the word "profit" is a dirty word in the eyes and ears of many hon. Members opposite, but nevertheless if industries are not allowed to accumulate funds to purchase modern equipment, they cannot be expected to modernise themselves.
During the course of the past two years, many laundries and cleaners have made no price increases and this makes it bitterly unfair—and I hope that the Under-Secretary will address himself to this—that those who are caught by the Order worst of all are those who have not increased their prices during the past two years, whereas those who have will be affected least of all. The sort of quiet family business in a country town which is going along desperately trying to absorb increasing costs—[Laughter.] The Under-Secretary may smile, but that happens. There are many firms, family businesses particularly, which have a very close regard to the position of their customers and which over the past two years have tried to absorb costs. They have found that their reward is to be caught slap bang by the Order without being able to recover their increasing costs, whereas their competitors, or firms in bigger towns, larger firms which may have passed on all those increases in the form of increasing prices, will not be affected by the Order. This sums up the position—those who have been bad are rewarded by the Government and those who have done what the Government have asked are penalised.
I well remember that in Standing Committee on the Prices and Incomes Bill the Under-Secretary told us that the sort of increases which would be allowed to be passed on were increases resulting from Government action and from tax increases. We accepted his word that that was a perfectly fair and reasonable and proper attitude to take. Will he now justify to the House his action in this instance with this Order against the background of the assurance which he gave to the Committee?
Let us consider the increases which we have had during the past two years and which the Government themselves have said it would be legitimate to pass on.

Mr. Lubbock: There have been increases.

Mr. Mitchell: The hon. Member for Orpington (Mr. Lubbock) interrupts from a sedentary position to say that there have been increases. The point is that there have been in some instances, and in many others there have not been. What is so desperately unfair is that


where there have not been increases the full penalties of the Order will fall.
There have been increases in petrol tax twice. This affects the laundry industry very substantially, because it operates door-to-door services. The price of oil is a small additional cost. Vehicle licence duty has gone up, the initial allowance for the purchase of the new vehicle has disappeared, investment allowances have been withdrawn. Purchase Tax on some of the equipment used has gone up because hire purchase has gone up, rents have gone up, interest rates have gone up, overdrafts have risen and many businesses are today working on overdrafts. These overdrafts are now costing them more than they have ever done. If that is something of which hon. Members opposite are proud then they are welcome to it.
The costs of this industry have been consistently rising. The rates have gone up, and I venture to suggest will go up a good deal more in the spring. The cost of Corporation Tax will have to be borne and the cost of Capital Gains Tax, in the case of the family business, will also have to be met. Coal has increased in price, postal charges have gone up, affecting those who render accounts, and in many instances labour costs have increased over the past two years.
I am not surprised that unions have asked for increases in wages in view of the increases in costs. Their members have suffered as a result of Government taxation. The price of beer and cigarettes has risen, too. People have asked for increases and this has been added to the costs in industry which is perfectly justified in recovering such costs. Consider S.E.T. The Government said when it was introduced that they intended that the cost of it should be passed on. Now they have the opportunity of justifying their words.
I had a letter from a Government Department last week which referred to the Government's statements about the need to secure a withdrawal of purchasing power. The Selective Employment Tax, increased postal charges and the like were supposed to represent this withdrawal of purchasing power. How does one withdraw purchasing power save as the Chancellor intended, by allowing prices to rise? What is the sense of the Chancellor coming here and saying in the spring that

he needs to withdraw so many hundreds of millions of pounds worth of purchasing power and that he is going to do it through S.E.T. so that prices will rise, and then having another Minister coming along and slapping down an Order on the laundry industry to see that it does not carry out the aim which the Chancellor told the House he had in mind in introducing S.E.T.?
The tax will cost the industry 5·81 per cent. Is it not to be allowed to recover that? Will the Under-Secretary eat the words and the promises he made in Committee? Look at the whole basis upon which the business community can expect to conduct its affairs. Businessmen had assurances from the Government. Those assurances were given during the passage through this House of the Prices and Incomes Bill. Today we have a direct contradiction of the promises made then. The Minister is taking the coward's way out—he is applying action and medicine which he would not take.
We have a service industry in the House, the House of Commons Catering Department, which has made increases in prices. It has never been allowed to accumulate enough capital to modernise its equipment which is a disgrace to any—

Mr. Deputy Speaker (Mr. Sydney Irving): Mr. Deputy Speaker (Mr. Sydney Irving) rose——

Mr. Mitchell: I will not pursue that point because obviously it would be out of order to do so. Nevertheless, if the House of Commons Catering Department passes on the Selective Employment Tax in increased prices, why should not laundries do the same?
The truth is that this Order is a political manœuvre to buy off the unions' opposition and the opposition of some members of the Left wing of the Labour Party.

Sir Douglas Glover: Perhaps I could help to put my hon. Friend in order by saying that the principal reason for the increase in charges in the House of Commons Catering Department is the cost of laundering.

Mr. Deputy Speaker: Order. The hon. Gentleman must address the Chair.

Sir D. Glover: My hon Friend says that he would be out of order in discussing the House of Commons Catering


Department, but the Department justifies its increased prices by the increased charge for laundering.

Mr. Mitchell: I am grateful to my hon. Friend for kindly drawing my attention to the way in which I can get past your eagle eye, Mr. Deputy Speaker, and to revert to drawing attention to the position concerning a service industry in the House. I think that I have adequately made the point that here is an industry under our own eyes, one of the most antiquated kitchen departments anywhere in London, which would not be allowed to exist in most restaurants in the West End but which is unable to do anything about putting its finances right because it has no capital to modernise itself since it has never been allowed to accumulate profits for that purpose.

Mr. Deputy Speaker: Order. The hon. Gentleman must not refer to the House of Commons Catering Department unless he can relate it to this Order.

Mr. Mitchell: Thank you, Mr. Deputy Speaker. My point is quite valid, that the Catering Department has not modernised itself and this Order will prevent the laundry industry from accumulating the funds to modernise itself. One of the needs of the laundry industry and its customers is modernisation.
First, this is a political manoeuvre to buy off the opposition of some hon. Members and the unions to other Orders which the Government have in mind. Secondly, it is a breach of the Prime Minister's promise of consultation between the industry and the Government before any Orders were introduced under the Act. I hope that the Under-Secretary of State will address himself to that point when he replies. Everybody in the House knows, although it is not as widely known outside, that the Prime Minister's promises are pretty well worthless.
Thirdly—and this is the essence of the case—the Order is damaging to investment in the industry, damaging to modernisation of the laundry industry and thus damaging to the long-term future of the industry's customers, the members of the public.

9.33 p.m.

Mr. Stanley Orme: Many of my hon. Friends and myself

have been highly critical of the Government's incomes policy, and in fact we still are. But we support this Order because we support action against price increases. I know that some of the things I say will not perhaps endear me to my Front Bench, but they certainly will not endear me to hon. Members opposite, particularly to the hon. Member for Oswestry (Mr. Biffen), who made an eloquent case against the Order which was, in fact, justification of an extension of the Order. The hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) did exactly the same.
Constituents in areas like mine will not be covered by this Order because it does not include laundrettes, wash houses, bagwash, and so forth. The main thing which it covers is the sending of laundry to the laundry industry, which is known to be the most expensive form of laundry. Therefore, the Government are closing the door after the horse has gone. We said this when the Government announced their intention of introducing the Order.
I cannot help feeling that the Government have introduced this Order first, perhaps, before they bring forward next the Thorn Electrical order against the wage increases which are being withheld in that firm. I am not in favour of a quid pro quo arrangement on those grounds, but I am in favour of action against prices as such.
I have said on many occasions that action against wages is action against individuals but that action against prices is action against commodities. I agree with many trade union leaders, and I think in particular of Mr. George Barratt, General Secretary of the Confederation of Shipbuilding and Engineering Unions, who said that if the Government would take firm and definite action on prices, wages would come much more easily into place. Therefore, while I am in favour of legislation against prices, I am completely opposed to legislation against wages and incomes.

Mr. Crouch: Could the hon. Member assure the House that he is in favour of consultation from the Government to the unions and to the C.B.I.?

Mr. Orme: I do not quite see the point of consultation in relation to the T.U.C. and the C.B.I. It has existed


across the board for a great number of years. What I am not in favour of is an unholy alliance of a corporate State approach of the Government, the employers and the trade unions. I am definitely opposed to that.
If the Government are serious about prices, there are many instances where they could have taken action. I am concerned about the recent White Paper on the period of severe restraint, which finally lifts the veil and gives almost a clear go-ahead for price increases, even in relation to investment profit, and so on. I agree that we must have investment, but if we start on this line and try at the same time to peg the wages sector and what is happening at present in the economy—this point has been made by a number of hon. Members opposite—wages will be pegged and people can do nothing about it put prices will be rising.

Mr. Deputy Speaker (Mr. Sydney Irving): Order. I am sorry to interrupt the hon. Member, but the prices with which we are concerned are the prices covered in the Order. It would be out of order in this debate to discuss general economic policy.

Mr. Orme: Thank you, Mr. Deputy Speaker. I appreciate the point and will come back to the Order.
This Order is the first statutory step that the Government have taken on prices. It is a very tentative step. It does not go very far and, as hon. Members have made clear, the vast majority of laundry prices have already been increased since the 20th July measures and the Selective Emplyoment Tax have been in operation.
Therefore, I would like to know from my hon. Friend the Under-Secretary exactly what the Government intend to do about increases which they may consider are already extortionate, about the question of trades inside the laundry industry that are outside the scope of the Order, and what action the Government, therefore, intend to take.
I feel that in supporting this section tonight my hon. Friends and I are supporting it because we support action against prices, and we want to see the Government, particularly in relation to the laundry price increase, serious in their intent in doing something about

this, and not trying to use this as a cover for other measures which may be introduced in a short while. It is on those grounds that I intervene in this debate, and to intimate to the Government that, while there is widespread support on this side for this Measure, we are very concerned about actions which may or may not be taken in future particularly in relation to other prices.

9.40 p.m.

Sir Douglas Glover: I rise without any hesitation to oppose this Order, which I think is the most arbitrary Order this arbitrary Government have introduced since they got into power in 1964. The Government said that any action in this field would be as a result of consultation, but the Government took no consultation at all. By this action they lost the good will which at that moment they had of the C.B.I. It was a clear-cut example of the unwisdom of their arbitrary action and of their lack of appreciation of the human susceptibilities of the people of this country. On those grounds alone I oppose this Order.
But I oppose this Order for weightier reasons than this feeling for the individual. First of all, this Order, I believe, represents the Government's thinking in these matters. The Government's thinking in these matters is that somebody who is in productive industry is ipso facto doing a useful job for the economy of this country, but that, therefore, somebody in a service industry is ipso facto doing something which is wasteful, uneconomic and anti-social, and therefore should be hit on the head at the earliest opportunity. I would point out to the Government that, if this is the case, then the Government ought to be bringing in restrictive Orders against the coal mining industry, because the coal mining industry has not produced a ton of coal since it went into business. All it does is to move it from one place to another. Nature produces coal, and what we human beings have been doing and are doing is moving it from one place to another, as we have for the last 250 years. It is a distributive industry and not a manufacturing industry. It is the same with the laundry industry.
It is all right Governments making statutory Orders and saying prices must not go up, but the laundry industry, which


is one of the most labour intensive industries in the country, is entirely governed in its activities by Government action. If the Government put up the price of petrol that increases the cost of collecting and delivering the laundry; if the Government put on S.E.T. that increases the cost of nearly all the girls working in the laundries and the cost of the men delivering the laundry. Inevitably, the Government thus put up the cost of each individual particle of the whole. It is a little bit unfair to say that an industry which is so conscious of Government action, which is so susceptible to increased charges because of Government action, should be the first industry or service against which the Government take direct action over increased prices.
I should like to interject here that I am not speaking as a laundryman, either Chinese or European. In fact, I am pretty hostile to my own laundry when I get my shirts back with holes in the tails which nobody can see. Do not get me wrong: I am not speaking tonight to protect the laundry industry and I am not saying there is nothing wrong with the laundry industry or that nothing can be done to make it better.
Here we have a classic example of the Government's thinking. They think that manufacturing industry is all right but that service industries are all wrong.
I do not want to over-emphasise this. It is hon. Gentlemen opposite who have talked about laundrettes, bag-washes and so on. I am not sneering at them, because that is the way that some people do their laundry. Others do it another way, and they are not always the wealthiest. For example, a woman with children who is out at work all day may not send her laundry to a bag-wash or a laundrette. Instead, she sends it to a laundry, and that means a heavy on-cost on her earnings.
With the international movement of the population, I suppose that probably 15 per cent. of the laundries in this country, certainly in the big cities, are those handling the laundry of visitors to the country—people who have come here to buy our goods, to see what we are doing in the export market, and even people who have come here as tourists.
This Order is freezing prices compulsorily, and I should like hon. Members to imagine for a moment what it will do. I do not know whether any hon. Member has had his laundry back since the Order came out. I have had mine back, and I am a little disappointed. I thought that I was sending my laundry to a high-class establishment. In the past, when I got it back, there was a little stud in the neck of each shirt, and the laundry was very well folded. But it is not so well folded now. If I was an American visitor staying in a hotel and I got my laundry back like that, I should be disappointed.
It has happened because the firm still has to run its laundry and make a profit. If it does not make a profit, it goes out of business, and I assume that even hon. Members opposite do not want their laundries to go out of business. Presumably they want their laundry done. They do not want half the firms in the country to close down—or do they?

Mr. Alexander W. Lyon: May I remind the hon. Gentleman that the Prices and Incomes Board advocated greater rationalisation in the industry because there are too many laundries?

Sir D. Glover: I am not even arguing against that, because, in that event, they will still put through the same number of shirts, pants and other things which I should not mention in the House. We do not want fewer articles to go to the laundry.
What the Order means is that the Government are advocating to the laundry industry that it should reduce its standards. They want it to reduce the number of people employed, thereby cutting costs, or to reduce its delivery services, thereby cutting costs, or to stop putting finished laundry in a certain form, thereby cutting costs. By the S.E.T., increases in the petrol tax and all the other taxes, the Government deliberately have increased the on-costs of an industry which is very labour-intensive and, therefore, has little room for manœeuvre in cutting down expenses and on-costs. With the probability that rates are going up, and when rents are no more than static, and labour costs have gone up as a result of the S.E.T., and petrol charges have gone up, it means that the industry faces


such increased on-costs that even the most efficient organisations cannot absorb them.
I should like a clear answer from the Minister tonight. Is he saying that, in the present position of Britain, the standard of laundry should be reduced, thereby keeping down costs, or is he saying that the laundry industry can absorb all the costs that the Government—not the industry's own labour force and not outside forces—have imposed upon it?
To go a stage further, during our debates on the S.E.T. the Government said that the whole purpose of it was to get people out of service industries. I should therefore like the Minister to tell the House where the people who are put out of work as a result of this Order will go. I ask that because I have said that it will mean a reduction in standards, and this, presumably, will mean a smaller labour force. Will Chan Chan the Chinaman go to the electronics industry, or will he be put out of work?
I think that the House has a right to demand from the Government a far bigger justification of the arbitrary action which they have taken without any consultation with the industry, and without any consultation with the C.B.I. thereby reducing for one of the smallest segments of our economy, the confidence between the C.B.I. and the Government. The Government promised consultation, and there was none. Why was not there the promised consultation?
Secondly, do the Government expect standards in the laundry industry to go down and thereby enable it to keep its prices stable? What do the Government expect will happen to the people who are in the industry and who as a result of this Order will be put out of work? Do they expect them to go into manufacturing industries which are laying off workers so fast that it is nobody's business, and all because of the action taken by the Government?
I think that the House has the right to demand clear answers to those three questions, and I ask the hon. Gentleman to give them as a result of this debate.

9.53 p.m.

The Under-Secretary of State for Economic Affairs (Mr. William Rodgers): I think that it would be helpful if at this

stage I replied to the debate, and I hope to give the House some of the information for which I have been asked. In making my remarks I hope that I shall stick strictly to the Order which we are debating, because, Mr. Deputy Speaker, as you found it necessary to point out on one or two occasions, the debate has at times tended to go a little wide.
I welcome the opportunity of speaking to this Order, both because this industry affects a large proportion of the population—the best estimate that I have is that about one-third of all households send items to the laundry—and because I think that we have a good case for having made this Order.
We have not sought to make the laundry and dry cleaning industry a scapegoat. I do not want anybody to feel that the Order is in any sense a reflection on an industry which over a long period has, by and large, given good public service. I take the points which have been made during the debate, including some by my hon. Friends, but I think that it is generally true to say that the National Board for Prices and Incomes gave the industry a reasonably clean bill of health. I say this at the beginning of my speech because I want to pay a tribute to the contribution which the industry has made, and to reassure it if it feels that it has been unfairly singled out in a way which casts some slur on it. This is not the way we look at it. We regard this Order as a pause for further inquiry which will enable us, in the words of my right hon. Friend the First Secretary, to carry out a holding operation at the end of which we will see more clearly what further steps it may be necessary to take.
The hon. Member for Worthing (Mr. Higgins) asked me a number of specific questions which I hope I shall catch up during my remarks, but perhaps I should deal with one of them now. He asked what had happened to Schedule 2. I do not think that the hon. Gentleman is half as naive as he was trying to lead the House to believe, because when we discussed the whole matter in Committee the hon. Gentleman and others fully appreciated that Schedule 2 would be replaced in due course, as it was by the standstill White Paper. For this reason it was understandable that when


we published a further White Paper dealing with the period of severe restraint this should take the place of the White Paper on the standstill. The hon. Gentleman asked a specific question relating to the new Schedule which it is important to answer. He asked what should happen in December. The answer is that industry should observe the criteria set out in the standstill White Paper, and quite clearly from the 1st January the criteria as set out in the new White Paper on the period of severe restraint will be the appropriate standard against which to judge either price or wage increases.
The burden of complaint this evening has been two fold. First, there is the argument that there was inadequate consultation. This point was made by the hon. Gentleman the Member for Worthing; it was returned to later by the hon. Gentleman the Member for Canterbury (Mr. Crouch), and at the end of our discussion the hon. Member for Ormskirk (Sir D. Glover) made the particular point of saying that the consultation had been inadequate. I wish to deal first with that point, and then to deal with the heart of the matter, namely whether the Order was justified, giving the circumstances of the case and the information available to the Government at the time. I hope the House will bear with me if I make clear the form which consultation took on that occasion.
It has been said that we failed properly to consult the C.B.I. before making this Order. Of course, it is the case that we have already discussed in the House this question of consultation. For that reason, there is not a great deal more that I can add to what was said on that occasion, particularly by my right hon. Friend the First Secretary. Let me accept straight away that my right hon. Friend had given an undertaking both to the C.B.I. and the T.U.C. that they would be consulted about the use made of these powers.
The facts are simply these: that on the 20th October, acting on behalf of my right hon. Friend the First Secretary, I invited the President and Director General of the C.B.I. to meet me at the Department of Economic Affairs. I told them that the Government had in mind to make an Order under Section 26 to

secure stability for the time being in laundry charges for the reasons which I then explained.
In the course of our discussion both Mr. Stephen Brown and Mr. Davies made it clear that such action would be unwelcome to the C.B.I. I think it is fair for me to say, if only in parenthesis, that there was no specific request made on that occasion for a further opportunity to discuss the matter either with my right hon. Friend or with myself, and the Order, of course, was made the following day.
My right hon. Friend, when speaking in the debate on 25th October, and when dealing with this particular point, made it clear that he recognises that the period allowed for consultation in this case was shorter than would normally be desired. Moreover, in reply to subsequent representations made to him by the C.B.I., my right hon. Friend the Prime Minister said that it is the Government's intention to allow a proper and reasonable time for consultation with the C.B.I. and the T.U.C. in the event of it being necessary further to use Part IV.

Sir D. Glover: The right hon Gentleman is disclosing something which is very significant. Is he really saying that in dealing with laundry prices the Government consider it is sufficient to speak to the president, or to the chairman, or to the secretary of the C.B.I. without having any consultation with the laundry industry itself?

Mr. Rodgers: I was dealing specifically with the C.B.I., but I had it in mind to say something about the point which the hon. Member has in mind. Perhaps I should add that although we have made it clear that we hope circumstances will occur in which it will be possible to have consultation which is perhaps more satisfactory than was possible on this occasion, there could be cases—and I think it is fair to say this in the House—in which particularly swift action is needed to deal with any threatened breach of the standstill. In these cases the Government will do their best to give the C.B.I. reasonable notice even allowing for such special circumstances. In the particular case of laundries and dry cleaners he has undertaken that the Government will consult the C.B.I. if the detailed investigation which is now being made by the Board of Trade should point


to any use of the powers under Section 27 of the Act.

Mr. David Webster: In view of what the Minister has said about reasonable time to discuss this matter, will he confirm what he said just now, namely, that he met the president and the deputy president of the C.B.I. the night before the Order was invoked?

Mr. Rodgers: The hon. Member cannot have been following my argument closely. As was very fairly conceded by my right hon. Friend, I have already said that on this occasion the consultation could have been regarded as inadequate. I am now repeating the assurance given by my right hon. Friend that although there may be difficult circumstances, where swift action is necessary, we still have it in mind to consult the parties concerned.
A rather different complaint has just been made by the hon. Member for Ormskirk, namely, that we should have had consultations with the representatives of the laundry industry before making this Order. It would not be right to accept as a general proposition that in addition to consulting the C.B.I. and the T.U.C., individual trade associations and other interested organisations should be consulted in cases of this sort, as an invariable rule.
A proposal to make an Order under these powers can be anticipated by anyone who gains advance information that it is to be made. It is not the sort of decision which should, in everyone's interest, be hanging around for a long time while discussions are taking place. This is a problem of forestalling, which in many circumstances the House has been prepared to recognise and accept. We hope, in any future use of Section 26 powers, to give rather longer notice than on this occasion, but, in the public interest, the extent of consultation aind its timing must clearly remain a matter of judgment.

Sir D. Glover: The hon. Gentleman has disclosed something which is very worrying to the House. Is he really saying that in this atmosphere of freeze, if a trade union has a legitimate ground the decision will be taken by the T.U.C. and, in the same way, if an industry has an order made against it the decision will be taken by the C.B.I.? That is

very authoritarian. The C.B.I. does not know about the laundry industry, and the T.U.C. does not know about individual unions.

Mr. Rodgers: That is not what I said. I said that in the end it was the Government that would make the decision. It is a proper decision for the Government. I indicated the problems of consultation, while making it clear that we hope on every occasion to have as much consultation as is compatible with the effective working of our policy and of our proper obligation to the public.
Those who criticise the Government on the ground of failing to consult the laundry industry before making the Order are closing their eyes to the fact that it is a temporary measure. It can be revoked at any time, and—perhaps of even more relevance—even while it is in force it is open to individual undertakings to ask to be exempted from its provisions.
These are matters which the Government are willing to discuss with representatives of the industry. My right hon. Friend the President of the Board of Trade had a useful meeting with the industry of launderers earlier today, at which I was also present.

Mr. Tim Fortescue: Is the hon. Gentleman saying that the Minister's undertakings can be broken more easily in the case of a temporary measure than in the case of a permanent one?

Mr. Rodgers: That is not what I said, and, if the hon. Member reads my speech tomorrow, he will see the position set out clearly. I am trying to help the House. I have given way four times so far, but I think that I should now try to press on and deal with the heart of the matter—the justification for making the Order when we did.
I would emphasise again the extent to which the Order is flexible. In the debate on 25th October, my right hon. Friend made this plain. In the first place, the fact that we have made an Order under Section 26 in no way prevents us from making directions under Section 27, as some of my hon. Friends have rightly pointed out. In other words, we are not simply resting now that we have checked the rise in laundry prices. Our


detailed investigations are continuing and they may show a case, in a number of instances, for making a Section 27 direction which would oblige the laundries concerned to reduce their prices to those prevailing before 20th July.
We should, of course, prefer not to go through the elaborate procedure of using our statutory powers and we must hope that discussions between the Government and the parties concerned will generally result in a voluntary reduction of the charge which will make the use of powers unnecessary. There is still plenty of scope for negotiation and a voluntary response to the present situation.
I should also make it clear that there is flexibility the other way. It is possible for laundries which feel that they have been unjustly treated and have a good case for an increase to make representations about way their prices should be allowed to rise above those prevailing when the Order was made. In fact—I was asked this question during the debate—the Board of Trade has received 38 requests for permission to increase prices from firms covered by the Order. These firms are being asked for the minimum information necessary to enable the Board to form a considered view of whether the request should be granted.
I take note of the points raised by the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) and her reservations about some of the information requested in the questionnaire. I also take note of the points of the hon. Member for Oswestry (Mr. Biffen) but, if a proper decision is to be made, it must be on the basis of confidential information which will give a balanced view of the position of the firms which are applying to get through. It is in their interest, as much as in the public interest, that the investigations should be complete and based on as much information as can be available.
I do not think, in these circumstances, given flexibility both ways and the fact that we are considering making directions under Section 27, but also considering the 38 requests made to us, that it could be said either that we are misusing our powers under Part IV of the Act or that we are treating the laundry industry harshly. We made it clear in debates on

the Bill that we had no intention of using the powers on a wholesale basis and that we would judge on the merits of the case.
This is what we have done. Of course we have been selective, but if one is to judge on the merits of the case and not simply use Part IV right across the board, it is necessary to look at separate industries and then make up one's mind on the case. We did not wish to use our statutory powers, but we felt it necessary to do so in view of the available evidence.
The Report of the National Board for Prices and Incomes has been referred to. It is right, particularly in view of the figures which I shall shortly give, that I should remind the House of exactly what the Board said when it considered the question of the S.E.T. Many of the contributions to the debate have displayed a good deal of confusion about the exact line the Government have been taking over laundries on S.E.T.
The House may remember that in the Report of the National Board for Prices and Incomes, whose general validity I think that it is fair to say has not been called into question, it was suggested that if the laundry and dry cleaning industries employed the same number of workers as before the Budget the S.E.T. would be equivalent, on average, to an increase in cost of 4½ per cent. for laundries and 4 per cent. for dry cleaners. The N.B.P.I. went on to say, in paragraph 56 of its Report:
If some allowance is made for the more economical use of labour and for the fact that to some extent the tax would seem to have been anticipated, the net average effect on prices over the next 12 months should be less than is indicated by these figures.
This, then, is legitimately the starting point for any view we may form about the decision the Government took in this case.

Mr. Higgins: The hon. Gentleman will recall that I disputed that figure. I suggested that the correct figure was 5·18 per cent. Would he disagree?

Mr. Rodgers: I think that the figure the hon. Gentleman meant to say was 5·81 per cent., and I am prepared to accept that higher figure in considering for the moment what the possibilities may be. It is perfectly true that the laundries have themselves suggested that a figure


of about 5·81 per cent., nearer 6 per cent., would be more legitimate, but I put to the House that even if the higher figure were preferred the case for action would have remained. I say "even if" because we must consider that the National Board for Prices and Incomes carried out an independent inquiry on the basis of all the information available to it and the laundry industry was able to submit such facts and figures as it thought should be considered. Nor am I suggesting, as was implied by some contributions to the discussion, that the only increase arising out of Government action is that due to the introduction of S.E.T. I readily concede that laundries will have been affected by increases in Purchase Tax, the duty on petrol and in other ways.
But again, looking at the figures in the Board's Report carefully—and I think that they are well spelt out here—I doubt whether in an average case one could justify a price increase of more than 1 per cent. or perhaps 2 per cent. on this score. We can now see the range of possibilities, stretching perhaps from about 5½ per cent. at one extreme up to 8 per cent. at the other. I wish then to describe the position as we found it on 20th October, and to say in passing that on the basis of such information as we have it seems to us that about a third of all laundries, perhaps less, increased their charges because of S.E.T., or for other reasons, between 20th July and 21st October. Therefore, it is not true that all the horses had bolted.

Mr. Biffen: The Under-Secretary of State says "a third". Is he referring to numbers or to the share of total turnover of the laundry industry?

Mr. Rodgers: I think that figure refers to the number of establishments but to the best of my knowledge, although the hon. Gentleman's point is perfectly fair, the figure for establishments could also be very broadly applicable to turnover. If the hon. Gentleman would like further information on that point I would be happy to try to provide it for him.
Let me describe the position on 20th October and set before the House, a few figures which I think will be relevant to the decision which was then made. At that date we had received from the public a total of 819 complaints about increases

in laundry and dry cleaning charges. These were in respect of 284 laundries and 15 separately identified dry cleaning firms. At that stage we had been able to relate price increase to turnover in 154 laundries and 15 dry cleaning firms. In other words, we had, at least in a preliminary way, processed complaints covering 154 laundries and 15 dry cleaning firms.
Bearing in mind the figures I gave earlier, in the case of laundries only 14 of these firms had made increases of 4 per cent. or less and a further 27 had made increases of 5 per cent. or less. Almost two-thirds of them, 98 out of 154, had made increases of over 8⅓ per cent., that is, 1d. in 1s., and of these 37 had been responsible for increases of over 10 per cent. and six had made increases of as much as 25 per cent.
Those are the figures which were available to us on 20th October, and it seemed to us, as I hope it will now seem to some hon. Members who have not previously seen the figures, that there was powerful evidence that the standstill was not being respected, and, in particular—this is the crux of the matter and it answers the principal point made by the hon. Member for Ormskirk—the Selective Employment Tax was being used as an excuse to pass on increases to the customer much in excess of what could be justified.
None of the separate dry cleaning firms had, on the face of it, increased their charges by less than 5½ per cent. and, broadly, the scale of their increases followed those of the laundries.
We have now had about 1,080 complaints involving 446 laundries and dry cleaners, and it is true to say that the pattern which was evident on 20th October has been evident also in the further complaints which we have received and in the result of the investigations which we have carried out.

Mr. Orme: Do not these figures confirm what many of us have been saying about locking the door after the horse has bolted? These increases had taken place before 20th October, and the Government's measures imposed then have not had any effect on them.

Mr. Rodgers: I take my hon. Friend's point, which is a fair and important one,


but I made clear before I gave these figures that, on the evidence available to us, not more than about 30 per cent. of the firms involved had increased their prices during the period. This fact taken together with what I said about the possibility of using Section 27 will, I hope, reassure my hon. Friend on that point, which is one of considerable substance.
Attempts have been made to ridicule the number of complaints in terms of the extent of the business carried on. I should make clear that, although my right hon. Friend the First Secretary of State invited complaints, the complaints we received were not the result of an organised campaign such as all of us in our separate constituency capacities are often familiar with. I have looked at many of the letters, and most of them have come from ordinary housewives, and sometimes from the husbands, who have found it possible during the course of a busy day to sit down and write a letter of complaint. I think that this absolutely genuine deluge of letters hides the experience of many housewives who felt aggrieved by the increases but did not find the time to get round to writing in.
Even if there is some sceptism on this point, the fact that we received over 1,000 complaints, far in excess of the number received about any other section of the economy, constituted a prima facie case. But I do not rest our case on the complaints received. I am resting it on the analysis of the complaints——

Mr. Webster: Mr. Webster rose——

Mr. Rodgers: —which I have——

Division No. 210.]
AYES
[10.22 p.m.


Alison, Michael (Barkston Ash)
Carlisle, Mark
Eyre, Reginald


Atkins, Humphrey (M't'n &amp; M'd'n)
Chichester-Clark, R.
Farr, John


Awdry, Daniel
Clark, Henry
Fletcher-Cooke, Charles


Baker, W. H. K.
Clegg, Walter
Fortescue, Tim


Batsford, Brian
Cooke, Robert
Foster, Sir John


Bell, Ronald
Costain, A. P.
Glover, Sir Douglas


Biffen, John
Craddock, Sir Beresford (Spelthorne)
Grant, Anthony


Biggs-Davison, John
Crouch, David
Grant-Ferris, R.


Birch, Rt. Hn. Nigel
Crowder, F. P.
Gurden, Harold


Black, Sir Cyril
Currie, G. B. H.
Hall, John (Wycombe)


Bossom, Sir Clive
Dalkeith, Earl of
Hall-Davis, A. G. F.


Boyle, Rt. Hn. Sir Edward
Dance, James
Harris, Reader (Heston)


Brinton, Sir Tatton
d'Avigdor-Goldsmid, Sir Henry
Harrison, Brian (Maldon)


Brown, Sir Edward (Bath)
Dean, Paul (Somerset, N.)
Harrison, Col. Sir Harwood (Eye)


Bruce-Gardyne, J.
Deedes, Rt. Hn. W. F. (Ashford)
Hawkins, Paul


Buchanan-Smith, Alick (Angus, N&amp;M)
Doughty, Charles
Heald, Rt. Hn. Sir Lionel


Buck, Antony (Colchester)
Eden, Sir John
Heseltine, Michael


Burden, F. A.
Elliot, Capt. Walter (Carshalton)
Higgins, Terence L.


Campbell, Gordon
Errington, Sir Eric
Hill, J. E, B.

Mr. Deputy Speaker: Order. The Minister is not giving way, so the hon. Gentleman must not persist.

Mr. Rodgers: If we judge not by the volume of complaints, though this is a relevant factor, but by the analysis which I presented to the House, a very substantial case is made out for this Order. I believe that it is a flexible instrument, and I do not think that it ought to be regarded as a slur on the industry. In my experience it has won very wide public support, and if the House has a proper concern for the effectiveness of the standstill on the prices side, in the interests of the housewife, of the ordinary customer, and in the national interest, then it ought to accept what I think is a fair-minded explanation of the facts which we had before us on that occasion. Now that these facts are available I very much hope that the hon. Member will reflect upon them and decide that the Prayer should be withdrawn. If he presses it to a Division, I very much hope that the House will reject it.

Mr. Higgins: Would the hon. Member state whether the figures which he quoted are figures of an average increase per establishment or merely individual price increases on specific items?

Mr. Rodgers: Those were the figures which we examined in the light not only of the complaints but of the further information which we were able to obtain. Therefore, they are not isolated increases such as might conceal other factors in the total pricing system of the laundries which would offset them.

Question put:—

The House divided: Ayes 134, Noes 217.

Division No. 210.]
AYES
[10.22 p.m.


Alison, Michael (Barkston Ash)
Carlisle, Mark
Eyre, Reginald


Atkins, Humphrey (M't'n &amp; M'd'n)
Chichester-Clark, R.
Farr, John


Awdry, Daniel
Clark, Henry
Fletcher-Cooke, Charles


Baker, W. H. K.
Clegg, Walter
Fortescue, Tim


Batsford, Brian
Cooke, Robert
Foster, Sir John


Bell, Ronald
Costain, A. P.
Glover, Sir Douglas


Biffen, John
Craddock, Sir Beresford (Spelthorne)
Grant, Anthony


Biggs-Davison, John
Crouch, David
Grant-Ferris, R.


Birch, Rt. Hn. Nigel
Crowder, F. P.
Gurden, Harold


Black, Sir Cyril
Currie, G. B. H.
Hall, John (Wycombe)


Bossom, Sir Clive
Dalkeith, Earl of
Hall-Davis, A. G. F.


Boyle, Rt. Hn. Sir Edward
Dance, James
Harris, Reader (Heston)


Brinton, Sir Tatton
d'Avigdor-Goldsmid, Sir Henry
Harrison, Brian (Maldon)


Brown, Sir Edward (Bath)
Dean, Paul (Somerset, N.)
Harrison, Col. Sir Harwood (Eye)


Bruce-Gardyne, J.
Deedes, Rt. Hn. W. F. (Ashford)
Hawkins, Paul


Buchanan-Smith, Alick (Angus, N&amp;M)
Doughty, Charles
Heald, Rt. Hn. Sir Lionel


Buck, Antony (Colchester)
Eden, Sir John
Heseltine, Michael


Burden, F. A.
Elliot, Capt. Walter (Carshalton)
Higgins, Terence L.


Campbell, Gordon
Errington, Sir Eric
Hill, J. E, B.




Hobson, Rt. Hn. Sir John
Mawby, Ray
Shaw, Michael (Sc'b'gh &amp; Whitby)


Hogg, Rt. Hn. Quintin
Mills, Peter (Torrington)
Sinclair, Sir George


Holland, Philip
Mitchell, David (Basingstoke)
Stoddart-Scott, Col. Sir M. (Ripon)


Hordern, Peter
Monro, Hector
Summers, Sir Spencer


Hornby, Richard
More, Jasper
Tapsell, Peter


Howell, David (Guildford)
Munro-Lucas-Tooth, sir Hugh
Taylor, Sir Charles (Eastbourne)


Hunt, John
Murton, Oscar
Taylor, Edward M.(G'gow, Cathcart)


Hutchison, Michael Clark
Noble, Rt. Hn. Michael
Teeling, Sir William


Iremonger, T. L.
Nott, John
Temple, John M.


Irvine, Bryant Godman (Rye)
Onslow, Cranley
Tilney, John


Jennings, J. C. (Burton)
Page, Graham (Crosby)
Vaughan-Morgan, Rt. Hn. Sir John


Jopling, Michael
Pearson, Sir Frank (Clitheroe)
Vickers, Dame Joan


Kaberry, Sir Donald
Peel, John
Walker-Smith, Rt. Hn. Sir Derek


Kershaw, Anthony
Percival, Ian
Wall, Patrick


King, Evelyn (Dorset, S.)
Pink, R. Bonner
Webster, David


Kirk, Peter
Powell, Rt. Hn. J. Enoch
Whitelaw, William


Knight, Mrs. Jill
Prior, J. M. L.
Wills, Sir Gerald (Bridgwater)


Lambton, Viscount
Pym, Francis
Wilson, Geoffrey (Truro)


Langford-Holt, Sir John
Ramsden, Rt. Hn. James
Wolrige-Gordon, Patrick


Legge-Bourke, Sir Harry
Rawlinson, Rt. Hn. Sir Peter
Wood, Rt. Hn. Richard


Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Renton, Rt. Hn. Sir David
Woodnutt, Mark


Loveys, W. H.
Ridley, Hn. Nicholas
Worsley, Marcus


MacArthur, Ian
Ridsdale, Julian
Younger, Hn. George


Macleod, Rt. Hn. Iain
Rossi, Hugh (Hornsey)



McMaster, Stanley
Russell, Sir Ronald
TELLERS FOR THE AYES:


Maude, Angus
Scott, Nicholas
Mr. R. W. Elliott and


Maudling, Rt. Hn. Reginald
Sharples, Richard
Mr. Peter Blaker.




NOES


Allaun, Frank (Salford, E.)
Fernyhough, E.
Lawson, George


Alldritt, Walter
Fletcher, Raymond (Ilkeston)
Leadbitter, Ted


Allen, Scholefield
Fletcher, Ted (Darlington)
Lee, Rt. Hn. Jennie (Cannock)


Armstrong, Ernest
Floud, Bernard
Lee, John (Reading)


Ashley, Jack
Foley, Maurice
Lestor, Miss Joan


Atkins, Ronald (Preston, N.)
Ford, Ben
Lever, Harold (Cheetham)


Atkinson, Norman (Tottenham)
Fowler, Gerry
Lewis, Ron (Carlisle)


Barnett, Joel
Fraser, John (Norwood)
Lipton, Marcus


Baxter, William
Fraser, Rt. Hn. Tom (Hamilton)
Lomas, Kenneth


Beaney, Alan
Freeson, Reginald
Loughlin, Charles


Bidwell, Sydney
Galpern, Sir Myer
Lubbock, Eric


Binns, John
Gardner, Tony
Lyon, Alexander W. (York)


Bishop, E. S.
Garrett, W. E.
Lyons, Edward (Bradford, E.)


Blackburn, F.
Garrow, Alex
McBride, Neil


Blenkinsop, Arthur
Ginsburg, David
McCann, John


Boardman, H.
Gourlay, Harry
MacColl, James


Booth, Albert
Gregory, Arnold
Mackintosh, John P.


Braddock, Mrs. E. M.
Grey, Charles (Durham)
Maclennan, Robert


Brooks, Edwin
Griffiths, David (Rother Valley)
McMillan, Tom (Glasgow, C.)


Broughton, Dr. A. D. D.
Griffiths, Rt. Hn. James (Llanelly)
McNamara, J. Kevin


Brown, Rt. Hn. George (Belper)
Griffiths, Will (Exchange)
MacPherson, Malcolm


Brown, Hugh D. (G'gow, Provan)
Grimond, Rt. Hn. J.
Mahon, Peter (Preston, S.)


Buchan, Norman
Hale, Leslie (Oldham, W.)
Mahon, Simon (Bootle)



Hamilton, James (Bothwell)
Mallalieu, J.P.W. (Huddersfield, E.)


Buchanan, Richard (G'gow, Sp'burn)
Hamilton, William (Fife, W.)
Manuel, Archie


Carmichael, Neil
Hamling, William
Mapp, Charles


Carter-Jones, Lewis
Hannan, William
Mason, Roy


Castle, Rt. Hn. Barbara
Harrison, Walter (Wakefield)
Mellish, Robert


Chapman, Donald
Haseldine, Norman
Millan, Bruce


Coe, Denis
Hattersley, Roy
Milne, Edward (Blyth)


Coleman, Donald
Hazell, Bert
Mitchell, R. C. (S'th'pton, Test)


Conlan, Bernard
Heffer, Eric S.
Moonman, Eric


Craddock, George (Bradford, S.)
Henig, Stanley
Morgan, Elystan (Cardiganshire)


Crossman, Rt. Hn. Richard
Herbison, Rt. Hn. Margaret
Morris, Alfred (Wythenshawe)


Cullen, Mrs. Alice
Hobden, Dennis (Brighton, K'town)
Moyle, Roland


Davidson, Arthur (Accrington)
Hooley, Frank
Mulley, Rt. Hn. Frederick


Davies, Dr. Ernest (Stretford)
Hooson, Emlyn
Murray, Albert


Davies, Harold (Leek)
Howarth, Harry (Wellingborough)
Newens, Stan


de Freitas, Sir Geoffrey
Howie, W.
Noel-Baker, Francis (Swindon)


Delargy, Hugh
Hoy, James
Norwood, Christopher


Dempsey, James
Hughes, Emrys (Ayrshire, S.)
Oakes, Gordon


Dewar, Donald
Hughes, Roy (Newport)
Ogden, Eric


Diamond, Rt, Hn. John
Hunter, Adam
Oram, Albert E.


Dobson, Ray
Hynd, John
Orbach, Maurice


Doig, Peter
Irvine, A. J. (Edge Hill)
Orme, Stanley


Dunwoody, Mrs. Gwyneth (Exeter)
Jackson, Colin (B'h'se &amp; Spenb'gh)
Oswald, Thomas


Dunwoody, Dr. John (F'th &amp; C'b'e)
Jackson, Peter M. (High Peak)
Owen, Dr. David (Plymouth, S'tn)


Eadie, Alex
Johnson, Carol (Lewisham, S.)
Owen, Will (Morpeth)


Edwards, Robert (Bilston)
Johnson, James (K'ston-on-Hull, W.)
Page, Derek (King's Lynn)


Ellis, John
Jones, Dan (Burnley)
Park, Trevor


English, Michael
Jones, J. Idwal (Wrexham)
Parker, John (Dagenham)


Ennals, David
Judd, Frank
Pavitt, Laurence


Ensor, David
Kelley, Richard
Peart, Rt. Hn. Fred


Evans, Albert (Islington, S.W.)
Kenyon, Clifford
Pentland, Norman


Faulds, Andrew
Kerr, Russell (Feltham)
Perry, George H. (Nottingham, S.)







Prentice, Rt. Hn. R. E.
Ryan, John
Wainwright, Richard (Colne Valley)


Price, William (Rugby)
Shaw, Arnold (Ilford, S.)
Walden, Brian (All Saints)


Probert, Arthur
Sheldon, Robert
Walker, Harold (Doncaster)


Pursey, Cmdr. Harry
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Wallace, George


Rankin, John
Short, Mrs. Renée (W'hampton, N.E.)
Watkins, David (Consett)


Redhead, Edward
Silkin, Rt. Hn. John (Deptford)
Wells, William (Walsall, N.)


Rees, Merlyn
Slater, Joseph
Whitaker, Ben


Reynolds, G. W.
Small, William
Whitlock, William


Rhodes, Geoffrey
Snow, Julian
Willey, Rt. Hn. Frederick


Richard, Ivor
Spriggs, Leslie
Williams, Alan (Swansea, W.)


Roberts, Albert (Normanton)
Steel, David (Roxburgh)
Williams, Alan Lee (Hornchurch)


Roberts, Gwilym (Bedfordshire, S.)
Steele, Thomas (Dunbartonshire, w.)
Williams, W. T. (Warrington)


Robertson, John (Paisley)
Storehouse, John
Wilson, William (Coventry, S.)


Robinson, W. O. J. (Walth'stow, E.)
Swingler, Stephen
Woodburn, Rt. Hn. A.


Rodgers, William (Stockton)
Taverne, Dick
Woof, Robert


Roebuck, Roy
Thomas, George (Cardiff, W.)



Rose, Paul
Thornton, Ernest
TELLERS FOR THE NOES:


Ross, Rt. Hn. William
Tuck, Raphael
Mr. Alan Fitch and


Rowland, Christopher (Meriden)
Urwin, T. W.
Mr. Ioan L. Evans.

Orders of the Day — SWAZILAND

Motion made, and Question proposed, That this. House do now adjourn—[Mr. Fitch.]

10.31 p.m.

Mr. James Johnson: I am sure that the Under-Secretary will understand why I ventilate this matter tonight. Last month the Secretary of State published a White Paper upon the Swazi constitutional proposals and this has caused anxiety to many people here who know the colony, which I hope the Under-Secretary will allay. He has been to South Africa and lately to the colony, and knows the place at first hand. He will also recall that in the 1950s he and Fenner Brockway, as he then was, and myself, raised colonial matters frequently, and I hope that he will not mind my saying that he was a good poacher then, and that I hope that he is a good gamekeeper now.
For the last 50 years the High Commission Territories have languished under the shadow of South African apartheid and the policies of Her Majesty's Government have dismally failed to further what I call the best interests of the people of what was known as Basutoland, Swaziland and Bechuanaland. These were our Protectorates. Our efforts seemed to be limited to ensuring that the Africans in these places found jobs in what was known then as the Union. One might term the Territories "economic Bantus-tans". Today all three are very vulnerable to economic pressure from South Africa.
The Colonial Development Corporation has only had two schemes in Botswana and has had no schemes in Basutoland or Lesotho. It has done much more in Swaziland, which is wealthier than the other two former colonial States. Despite this, what I would call the modest recommendations of the Morse economic survey of some years ago have been shelved by successive Conservative Governments.
No one can criticise the attitude of Seretse Khama over the Rhodesian question, when one realises the vulnerable position of the economy vis-à-vis South Africa. Swaziland, however, is still in our charge and will become internally independent this coming year, and fully

independent, I understand, by the end of 1970. In some ways the position has changed since the 1950s when our policy was shaped by the Ambassador in Pretoria. Now we have a Queen's Commissioner and matters are directly under our control.
There are two unique problems. The first is that there is a most unusual alliance between the black African, the tribalistic chiefs and the white European industrialists. The second is the illiteracy rate which is one of the highest in the world. I am shocked and ashamed to see, in a pamphlet "Training of Teachers for the Commonwealth", that we have only one lady and two men in the United Kingdom as students from the Colony of Swaziland.
To go back a little, in 1881 we first guaranteed independence to the Swazi nation. In 1921, Sobhuza II took over the Paramount Chiefship. He is now 77 and is still there. It was not until 1961 that Her Majesty's Government took the first fumbling steps towards a constitution. In 1961 we had the first political party of a nationalist African movement, the Progressive Party, led by Dr. Ambrose Zwane, who was then seeking, as the people still seek today, universal adult suffrage, which, I feel sure, they will get in the new Constitution.
In 1963 the first constitutional conference was held. This got into such difficulties that the Paramount Chief himself did not like it. He petitioned against it and had his own referendum in the Territory. To show his power, he had a 99·9 per cent. referendum in his favour. Not even pre-war Germany or the Soviet Union ever got figures like this!
In 1964 we came to the first elections. Sobhuza and his Imbokodvo movement won all the seats they could possibly win. The reactionary whites, mainly South African settlers, organised in the United Swazi Association, led by Carol Todd, won all the seats they could possibly win in alliance with the Paramount Chiefs. The United African National opposition, despite getting 12·4 per cent. of the votes could not get even a single seat. It was widely alleged that the Swaziland National Council and the United Party of Carol Todd were getting funds and help for the South African Government and that voters were being


influenced. The tribal chiefs were swaying the peasants who held the land under the chiefs. Petitions were then submitted to the Nationalist Party which, if successful, would have unseated half the Legislative Council. They were not upheld.
There was discontent all over the country, in the urban areas and in the mining camps. At Piggy's Peak, where the big Havelock asbestos mine was located, the trouble was such that we flew down a battalion of soldiers from Kenya. I wonder whether they are still there. They may be.
The new government of Sobhuza soon asked for independence talks. A Committee was appointed under Sir Francis Loyd and in May this year it proposed a number of changes. Briefly, they are as follows. It was proposed that there should be internal self-government on the British monarchial pattern under our protection. Sobhuza II was to be King and Head of State. The lower House, or House of Assembly, would have a Speaker and 24 elected members, from eight constituencies with three members each, an additional six being nominated by the King. There was also to be an upper House, with a Speaker and twelve members.
I do not regard that as the sort of constitution which we should support and I should like to state a few objections. Any democratic change would be heavily weighted against by the overwhelming power given to the King. Indeed, the White Paper following the constitutional conference, issued by my right hon. Friend the Secretary of State a few weeks ago, confirms all these proposals. Appendix II of the White Paper gives chapter and verse for all these proposals except that concerning land. Most changes of any importance that might be desired for the future could be vetoed by the King. In fact, paragraph 33 of the White Paper would allow the King to dissolve Parliament.
Let us consider, for example, the nomination of six additional members of the lower House. What is the reason for this proposal? In the last elections the traditional parties behind the King swept the board. Why do we have nominations? I would have thought it was to make sure that minorities who do not win seats had some places in the House,

as against the majority who do win seats. The task and the duty of any constitution of this nature must be to lessen power at the centre and not to increase and to entrench it. Again why have a second House at all? In other African States there is need for it, as in Nigeria, where we have emirs and other traditional chiefs. There is need there for their representation, but where, as in Swaziland, the traditional heads of the tribes are themselves winning seats, why should they have power in the lower Chamber and also have representation in the upper Chamber?
Why should there be three-member constituencies? Why not single-member constituencies? I should have thought it better to have had not eight three-member seats but 24 single-member seats, particularly such seats for the urban areas where the black nationalist movement will have its strength in future, and where there will be union workers of all kinds, constituting a new force in this traditional society. These new men will want a voice in the Legislative Council in the future.
Again, the King can appoint the chief justice. He can appoint the judiciary. Why is this so? Why should not the Prime Minister and his Cabinet appoint them, as in other more advanced societies? Indeed, the King, through the chief justice, can if desirous, appoint almost 100 per cent. of the Public Service Commission also. I do not like this, and I hope that the Under-Secretary can answer satisfactorily these points.
Examining the land question, according to paragraph 57 of the White Paper:
The Swazi nation's land should be vested in the King.
Since the land is economically and politically the most important element in Swazi affairs, this particular statement needs some clarification. Can the King and the Swazi National Council block in perpetuity all future decisions of the Prime Minister and his elected Cabinet—in two years' time, in 10 years' time? Land tenure in Africa and in Swaziland is of immense emotional and political significance. Some change in the system of land tenure is essential in the future.
One thing the Secretary of State turned down when put to him by Sobhuza and


his National Council was on this matter of mineral concessions. It was proposed to the British Government that authority should be vested in the King for the granting of mineral concessions. This is in page 5, paragraph 10. What a carve-up if Sobhuza II, Carol Todd and the South African financiers were allowed to exploit the mineral wealth while the elected African national Government stood idly by. There is still some anxiety here; and I hope the Minister will please scan paragraph 62 where the matter of minerals is not designated as a major provision but simply as one of "certain important provisions". Paragraph 61(a) and 61(b) are a little bit at variance upon this, because if it is simply "certain important provisions" not entrenched, this can be later amended by a 75 per cent. vote in Parliament.
In the light of all this, I ask if the Minister will kindly say when a constitutional conference is likely to be held. I would hope, following the White Paper of this month, fairly early in the coming year.
When elections are held, would the Minister please think of appointing an independent commission of the United Nations to supervise the elections, because after the last electons there was great feeling; otherwise, a battalion of troops would not have been flown in by Her Majesty's Government to keep order. There was much Opposition discontent, and I hope that the same will not be allowed to occur in the elections of the future.
Lastly, I want to put to my hon. Friend one or two short questions concerning economic development. Compared with Lesotho and Botswana, this is supposed to be a wealthy colony. There are 270,000 Africans, mainly poverty-stricken peasants. The cash income of a homestead of five to eight persons is less than £26 a year, or 10s. a week. Over-stocking is endemic, and pasture management is poor. The poverty of the peasants is the major problem, for it is essentially a subsistence farming community, like all African States. Fewer than 8 per cent. of people are in the towns.
As for mining, the asbestos companies are financed by South African capital, and the asbestos is exported by overhead cars to Transvaal. One mine alone sup-

plies 25 per cent. of the national revenue. The Swaziland Iron Ore Company is financed again by South African capital and is South African based. The first railway was built this year, but it carries iron ore only. Why is it that passengers are not allowed to be carried to Lourenço Marques or to any other outlets of the Territory?
The saddest feature of all is that over half the males of the rural society outside the towns are forced to work inside South Africa or in Mozambique or other territories. They send back something like £400,000 a year to their families, but that is no compensation to wives who have lost their husbands. The quicker that we get in technical assistance and more money to put the economy on a more balanced footing, the better it will be for family life in the Territory.
As regards education, the Department is lacking in funds. There is no adult education and there are only 130 pupils receiving technical education. Much more needs to be spent, particularly to train teachers and nurses. Nurses, especially, are wanted badly. I know that communications are important anywhere in Africa, but why is it that in past years, in this lopsided economy dominated by South African investment, railways and roads have had ten times the money spent on them per year than has been spent on education?
After the scandalous neglect of the past by Governments of the United Kingdom, I hope that we shall attempt to make up for it now. We have a short time in which to pump in both money and men. We have only got until the end of 1970. Let us do our best to make this a better shop window for the adjoining African peoples of South Africa and Mozambique.

10.48 p.m.

Mr. Patrick Wall: The House must realise two facts when debating Swaziland. The first is the strong loyalty to the Ngwenyama, the Paramount Chief soon to be the King. The second fact is the economic dependence of the country upon South Africa.
Hon. Members will recall that, in 1963, when the new Constitution was introduced, it was biased in favour of the political parties. I presented a Petition


to the House on behalf of the Ngwenyama to pray against that bias. This had no result. The Ngwenyama then had to decide whether to boycott the elections under the new Constitution or to fight them. As the hon. Member for Kingston upon Hull, West (Mr. James Johnson) said, he fought them and won every single seat.
We have before the House, after a great deal of research on the part of the present Government, a Constitution broadly agreed by all parties in Swaziland. I understand that there is only one major query, and that is as regards minerals. However, the Government have reached a fair compromise in Appendix II, Paragraph 58, where it is agreed that the power to make grants over minerals will be vested in the King but that he is to act in accordance with the advice of his Cabinet over the allocation of grants.
The Government have struck a fair balance. The Constitution has been worked out by the Swazis themselves. They have not even had to come to London to put their case to the Government. The Under-Secretary went to Swaziland himself. May I congratulate him on the results, and express what I am sure is the wish, from all sides of the House, that the new King and his people in their small but strategically important country in Southern Africa have a happy future as they move towards independence.

10.50 p.m.

The Under-Secretary of State for the Colonies (Mr. John Stonehouse): The citizens of Hull must be very proud to-night, because two of their Members, after a long day, have sought to take the attention of the House away from the domestic affairs of the United Kingdom to one of our Dependencies, Swaziland, and I am grateful to my hon. Friend the Member for Kingston upon Hull, West (Mr. James Johnson) for initiating this debate. It is very important that we continue to take a direct interest in the affairs of these Territories for which we are responsible. My hon. Friend has asked a number of questions, and I shall do my best to reply to them.
I propose to deal first with the powers of the King. What we aim to achieve

in the new Constitution for Swaziland is that the King shall be a constitutional monarch, and that most of the political power will be clearly in the hands of the elected Ministers at the next election. This is the point which we have now established in regard to the control of minerals, which I think is very important to the future of Swaziland, this being such an important part of the future economic development of the country.
I want to take up one or two of the detailed points made in the debate because I think that my hon. Friend may have had a misunderstanding about the powers of the King, particularly in relation to the appointment of the chief justice. Under the new Constitution, the King will not appoint the chief justice. Up to independence, the chief justice will continue to be appointed by Her Majesty's Commissioner in pursuance of Her Majesty's instructions. The other judges will be appointed by Her Majesty's Commissioner in accordance with the advice of the chief justice until the Judicial Service Commission becomes executive, and thereafter by the King, but in accordance with the advice of the Judicial Service Commission. It is therefore not correct to say that the King will have this extremely important power.
The question of the dissolution of Parliament was also raised. I think that it is interesting to refer to the other constitutions which have been arranged in the pre-independence period, like Basutoland, for instance. As my hon. Friend will see, this provision to which he objects is similar to the provision adopted elsewhere. It is the normal procedure. It is unusual for it to be used, but it is important for it to be there.
My hon. Friend complained about the size of the constituencies, but it was our thought that this compromise was the best one for Swaziland, bearing in mind that if the constituencies are too small there will be a tendency perhaps for certain of the candidates to attempt to get votes by unorthodox means. This will be avoided if the constituencies are as large as has been suggested, although in a small country with 120,000 electors they will still be extremely small constituencies. There will be eight of them, returning three for each constituency. This was a compromise between the various proposals which were put before


us, and I must say that when I was in Swaziland I found this proposal to be generally accepted, apart from one or two of the minority parties, which, even on a percentage assessment, received very small support during the last election.
My hon. Friend raised the queston of the control of minerals, and I am grateful to him for referring to this. I am also grateful to the hon. Member for Haltemprice (Mr. Wall) for congratulating us on this decision. It was not an easy decision to reach, particularly as feelings were very strong on this subject, but I am satisfied that the Swazis, in their own good sense, will realise that this is the best solution for the long-term future of Swaziland, and is not something which is best just for the period of the last few years before they reach independence. It is good sense—as I think most Swazis will realise, on reflection—that the Ministers who are elected as a result of a democratic franchise should have clear control over the granting of mineral rights, rather than having a confusion of power in this respect lying between them and the traditional authorities.
Having used this provision in the Constitution for the next few years before independence they will probably decide to use it in the period afterwards. As my hon. Friend said, it is clear from paragraph 63(c) that this provision is subject to amendment by the Members at a joint sitting of both Houses, provided they obtain 75 per cent. of the votes cast. It is therefore not one of the most entrenched provisions, but in my view it is most unlikely that the Imbokodvo will move to amend under this provision.
I was extremely impressed by the quality of the politicians in Swaziland. In the last few years they have developed a political organisation which reflects an overwhelming majority of the Swazis. In free elections, as the House knows, they obtained about 85 per cent. of the votes cast. We must recognise that the Imbokodvo has overwhelming support. I was interested by the statesmanlike way in which the men who will be the future Ministers of Swaziland are conducting themselves at this time.

Mr. James Johnson: Does not my hon. Friend accept that a party which polls 12½ per cent. of the votes and is particularly dominant or important in the urban

areas at least deserves some representation in the House?

Mr. Stonehouse: I believe it will have the opportunity, if it contests the eight seats being arranged, to obtain a fair chance of election in those constituencies.
I was very impressed with the way in which the present members of the Executive Council are approaching their tasks, and I have every confidence that whoever wins the next election will be able to help Swaziland in the important period before independence.
That brings me to the question of education and economic development. I am glad that my hon. Friend referred to the question of schools in Swaziland. In my view this area has been badly neglected in the past. I was very shocked when I saw the facilities with which many of the rural schools had to cope. It is essential that a very high priority should be given to the provision of better educational facilities. I heard, on the part of industrialists in Swaziland, a cry for more educated young men whom they could train for skills in various jobs. There are many opportunities for young men in the development of Swaziland, provided they have an opportunity of getting the basic education, and it is our hope that this will be available to them in the coming years.
Economic development depends to a large extent on the improvement of agricultural techniques. My hon. Friend was right in talking about overstocking, and the failure to use the land to the best advantage. I hope that the new agricultural college at Malkerns, which I had the pleasure of seeing during my visit, will do a good job in training not only young men, for careers on the land, but also some of the established farmers. This school has been set up with funds from the Freedom from Hunger Campaign and Oxfam, and it seemed to me that they are well placed now to give a fine stimulus to the development of efficient agriculture in Swaziland.
I had an opportunity of going to some of the rural parts, where new schemes have been developed to help the Swazis improve the land. If these pilot schemes can be extended to the other parts of Swaziland they will help to raise standards enormously. The Swaziland irrigation scheme, which is one of the


responsibilities of the C.D.C., is another example of what can be achieved. Here, in the low veldt, as a result of irrigation from the Komati, a whole area of land has been developed for the growing of citrus and rice, and many Swazis have been established on plots where they are able to achieve very high incomes, with the supervision of their techniques. The future of agricultural development in Swaziland can be a very bright one.
The development of other industries and mines in Swaziland will also be extremely important. I went to the

Matsapa Industrial Estate, near the airport, where there has been a most encouraging development. A spur of the railway has been built to this estate, and it will provide a nucleus for very efficient industries——

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at one minute past Eleven o'clock.